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Virgin Atlantic Airways seeks U.S. Chapter 15 bankruptcy protection


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Virgin Atlantic Airways seeks U.S. Chapter 15 bankruptcy protection

By David Shepardson and Kate Holton

 

2020-08-04T205024Z_2_LYNXNPEG731MY_RTROPTP_4_HEALTH-CORONAVIRUS-BRITAIN-AIRLINES.JPG

FILE PHOTO: Virgin Atlantic and TUI Airways aircraft are seen at Manchester Airport, following the outbreak of the coronavirus disease (COVID-19), Manchester, Britain, June 8, 2020. REUTERS/Phil Noble

 

WASHINGTON/LONDON (Reuters) - Virgin Atlantic Airways Ltd [VA.UL] is seeking protection from creditors in the United States under Chapter 15 of the U.S. Bankruptcy Code, which allows a foreign debtor to shield assets in this country, according to a court filing on Tuesday.

 

Virgin Atlantic's filing in U.S. bankruptcy court in the southern district of New York said it has negotiated a deal with stakeholders "for a consensual recapitalization" that will get debt off its balance sheet and "immediately position it for sustainable long-term growth."

 

In July, Virgin Atlantic said it has agreed a rescue deal with shareholders and creditors worth 1.2 billion pounds ($1.57 billion) to secure its future beyond the coronavirus crisis.

 

The U.S. filing is an ancillary proceeding tied to a separate action filed in a British court, where Virgin Atlantic obtained approval Tuesday to convene meetings of affected creditors to vote on the plan on Aug. 25.

 

An airline spokeswoman said the restructuring plan was before a British court "to secure approval from all relevant creditors before implementation." She added the "process is proceeding with the support of the majority of our creditors."

 

Bloomberg reported Virgin Atlantic told a London court it could run of money in September if a restructuring deal is not approved.

 

Non U.S.-companies use Chapter 15 to block creditors who want to file lawsuits or tie up assets in the United States.

 

In July, the airline said its private deal with stakeholders eliminates the need for support from the British government that billionaire founder Richard Branson had sought. The reorganization is expected to be completed towards the end of this summer and be spread across the next 18 months.

 

The airline, 51% owned by Branson’s Virgin Group and 49% by U.S. airline Delta, closed its Gatwick base and cut more than 3,500 jobs to contend with the fallout from the COVID-19 pandemic, which has grounded planes and hammered demand for air travel.

 

"Delta said it supported the plan and was "optimistic" that it would help Virgin Atlantic "maintain its position" in the travel market.

 

Virgin Atlantic said it needed to recapitalize "to not only survive the exigent threats posed by the COVID-19 global pandemic but to thrive once the immediate global health crisis passes."

 

It added in a court filing reservations are down 89% from a year ago and current demand for the second half of 2020 is at approximately 25% of 2019 levels. Virgin Atlantic also owns Virgin Atlantic Holidays, a tour operator business and Virgin Atlantic Cargo.

 

The high-profile Branson had attracted criticism after calling for government help for Virgin Atlantic to survive the downturn.

 

(Reporting by Bhargav Acharya in Bengaluru, David Shepardson in Washington and Jonathan Stempel in New York; Editing by Sandra Maler and David Gregorio)

 

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-- © Copyright Reuters 2020-08-05
 
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Virgin atlantic profits..

2013  -£7.5m

2014  -£154m

2015  £83.4m

2016  £180.9m

2017  -£60.8m

2018  -£56.2m

 

A total of -£15.5m over 6 years with no covid. Hardly inspiring figures for investors

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the problems with VA are being reflected in other parts of the Virgin planet. Virgin in Australia is going into a barebone, almost caretaker mode; including the reported dumping of its entire 'TigerAir' segment. 

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13 minutes ago, Logosone said:

Damn shame, I remember flying with their Upper Class from London to Miami, fantastic service.

If you sell a $5000 service for $3000 it will appear to be superb value for money.

 

But it won't last long.

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4 minutes ago, mrfill said:

If you sell a $5000 service for $3000 it will appear to be superb value for money.

 

But it won't last long.

It really was very good, proper plates and cutlery, steak medium rare, champagne, orange juice and good looking stewardesses to boot. 

 

Imagine my shock when I flew Condor in economy.

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11 minutes ago, Logosone said:

It really was very good, proper plates and cutlery, steak medium rare, champagne, orange juice and good looking stewardesses to boot. 

 

Imagine my shock when I flew Condor in economy.

Not so sure about some of the stewardesses...

Screenshot_20200805_120628.jpeg

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I hope for Branson's sake that this goes through before he blasts off into space.

 

 

Edited by ballpoint
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Aircraft company goes bust after government doesn't allow it to operate for 6 months.

Hardly surprising, same as all the other companies the government effectively stopped operating.

(insert government of choice to blame)

 

Wonder how the cruise ship companies are doing?

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4 minutes ago, mrfill said:

Not so sure about some of the stewardesses...

Screenshot_20200805_120628.jpeg

They had really attractive stewardesses back then. In Upper Class anyway, but then I guess it's standard procedure for Airlines to put the best lookers in first class.

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59 minutes ago, mrfill said:

Virgin atlantic profits..

2013  -£7.5m

2014  -£154m

2015  £83.4m

2016  £180.9m

2017  -£60.8m

2018  -£56.2m

 

A total of -£15.5m over 6 years with no covid. Hardly inspiring figures for investors

 

That's the set of books they pay taxes on... 

 

How much of those losses were actual operating losses and how much were tax dodges?

 

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13 minutes ago, ballpoint said:

I hope for Branson's sake that this goes through before he blasts off into space.

 

 

is he doing a runner       ?

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