Photo: Mike Burdett

LONDON – The Virgin Group, run by Sir Richard Branson, has placed a £200m package of immediate funding into its airline division, as part of its race to raise £1bn.

It is understood that this is going to contribute towards the closing stages of its financial discovery mission.

Around £400m of shareholder support has also been committed by Delta Air Lines (DL), which owns a 49% stake in the carrier.

Virgin Atlantic Airbus A330-343 G-VSXY. Photo: Hiro Nishikura

Other Investment firms

The £200m invested into Atlantic follows a commitment by Davidson Kempner Capital Management to provide around about the same amount as the Virgin Group into the carrier, too.

On top of this, other investment firms such as Centerbridge Partners, who had previously dropped out of the financing of the carrier, have got back in touch with the airline and added a late proposal that could bring some more money into the carrier as well.

According to Bloomberg, the Virgin Group Board of Directors are due to meet this Friday to discuss the funding agreement and to determine whether it will be approved or not.

Photo: Vincenzo Pace

Government Investment

On top of this, it is unclear if the UK Government will place any investment into the debt-stricken carrier as well.

Previously, the Chancellor of the Exchequer, Rishi Sunak said in March that airlines should explore all options before turning to the government for support.

“We would expect all companies to be pursuing all possible actions to preserve cash and maximise liquidity, including engaging with shareholders, lenders and the markets and utilising all available assets and facilities.”

It is understood that most of the money raised by Branson has come from selling shares in his Virgin Galactic Holdings firm.

Any private financing will not affect the structure of equity balances between the two sides, so the motion is expected to pass without any hindrances.

Virgin Atlantic Boeing 747-41R G-VXLG arriving into Manchester Airport. (Thomas Saunders)

Refinancing Negotiations

Virgin Atlantic earlier this year announced plans to close its base at London Gatwick, and cut 3,150 jobs as well as retire the rest of its Boeing 747-400 fleet.

At the moment, the airline is currently negotiating with creditors including aircraft lessors for the refinancing of certain financial asset deals, which could free up around £250 million in spare cash flow.

It will ultimately be interesting to see how Friday will go for the airline, and whether such financing plans will be approved or whether the UK government may need to intervene on matters.