Virgin Atlantic has announced a 1.2 billion-euro private recapitalization plan that will enable it to keep flying and, the carrier says, paves the way for a return to profitability in 2022.
Virgin expects to receive the lifeline, roughly $1.37 billion in U.S. dollars, over 18 months. A direct investment of 200 million euro will be made by majority owner Virgin Group. In addition, the global institutional investment management firm Davidson Kempner Capital Management will contribute 170 million euro, becoming a new Virgin Atlantic partner.
The remainder of the package will be delivered in the form of deferred and waived financial obligations by shareholders and creditors, including Delta, which is a 49% Virgin Atlantic owner. Delta is deferring branding fees and other fees related to the carriers' joint venture partnership, CEO Ed Bastian said during an earnings call Tuesday.
"All stakeholders have made some meaningful contributions to enable Virgin to fly again, and we are excited about that," he said.
Virgin Atlantic nearly halted flying during the early phase of the Covid-19 pandemic this spring, reducing capacity year-over-year during the second quarter by 98%.
The carrier previously said that it plans to resume regular operations on July 20, including the resumption of flying from London to Orlando, Los Angeles and New York JFK on that day or the next.
The recapitalization plan and Virgin Atlantic's resumption of service are part of a new five-year business plan for the transatlantic carrier. By 2022, Virgin Atlantic plans to be flying the same number of routes as in 2019, though with less capacity.
"We have taken painful measures, but we have accomplished what many thought impossible," said Virgin Atlantic CEO Shai Weiss. "The solvent recapitalization of Virgin Atlantic will ensure that we can continue to provide vital connectivity and competition to consumers and businesses in Britain and beyond."
The carrier expects the plan to take effect in the late summer, following formal approval under a court-sanctioned U.K. process.