Richard Branson's Virgin Atlantic close to 'finalising' £160m bailout

Suban Abdulla
·3-min read
Virgin Atlantic Airline planes are pictured at the apron at Manchester Airport in north-west England, on June 8, 2020, as the UK government's planned 14-day quarantine for international arrivals to limit the spread of the novel coronavirus begins. (Photo by Oli SCARFF / AFP) (Photo by OLI SCARFF/AFP via Getty Images)
The company has taken "early, decisive action" to minimise their costs, preserve cash and protect as many jobs as possible, since the onset of the coronavirus pandemic. Photo: Oli SCARFF / AFP via Getty Images

Billionaire Richard Branson's flagship company, Virgin Atlantic is holding discussions with creditors and shareholders about an additional £160m ($223m) bailout package six months after it received a £1.2bn rescue deal.

The tycoon's firm is said to be "close to finalising the new funding", according to Sky News. This will include a £100m loan from Branson's Virgin Group, the airline's majority owner. Around £60m of further deferrals will be granted to the company to avoid further pressure on cashflows.

The company has taken "early, decisive action" to minimise their costs, preserve cash and protect as many jobs as possible, since the onset of the coronavirus pandemic.

Sources close to the Virgin Atlantic discussions told the broadcaster that its "creditors had been supportive" of the proposal, which could provide relief in the event that airlines stay grounded and the UK does not resume international travel.

"We continue to bolster our balance sheet in anticipation of the lifting of international travel restrictions during the second quarter of 2021," a spokesperson for Virgin Atlantic said.

The latest £160m financing "provides further resilience against a slower revenue recovery" this year and "follows a $230m financing on two Boeing 787s in January." The spokesperson said this allowed the company to "pay down debt and strengthen" its "cash position."

"We remain confident that Virgin Atlantic will emerge a sustainably profitable airline and would like to thank our creditors and shareholders, Virgin Group and Delta, for their ongoing support and unwavering belief in our future."

Virgin Atlantic has "engaged in private discussions with creditors, including our lessors and lenders," the company said. Adding: "With the successful mass rollout of vaccines and the implementation of pre-departure testing regimes, customers are booking for travel from the second quarter of 2021 and beyond."

READ MORE: BA considers using large jets for UK's post-lockdown holiday boom

It comes as airlines are gearing up for what is expected to be a holiday boom once the UK exits lockdown.

Airlines and travel firms have seen a bump in demand since prime minister Boris Johnson proposed a four-step roadmap out of lockdown, last month.

Johnson said that a government taskforce will produce a report by 12 April which will recommend how international trips can resume for people in England.

This could lead to foreign holidays being allowed by 17 May at the earliest.

British Airways is considering deploying some of its bigger planes to add capacity for an anticipated post-pandemic holiday rush as the UK eases out of lockdown.

The British flag carrier, part of International Consolidated Airlines Group (IAG.L), could divert some of its jets used on long-haul routes to short-haul destinations as demand for European trips from the UK increases.

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