MIAMI – Virgin Atlantic (VS) is reportedly finalizing a US$1Bn rescue deal that would save thousands of aviation jobs in the U.K. The airline reports the deal will release tens of millions of pounds in credit-card cash that was being withheld.
SkyNews says that VS was trying to resolve a demand for collateral from payment processing firm First Data. The report claims that chief executive Shai Weiss is looking to moderate the requests that it hold on to all the cash generated by future bookings.
This week, VS was in detailed talks with Cardnet, which is owned by the Lloyds Banking Group, and First Data, a subsidiary of American Fiserv. The airline was hoping to persuade the two companies to release around £200m of funds to aid its working capital as part of a broader rescue deal.
Another solution would allow for hedge fund Davidson Kempner Capital Management to inject US$200M of debt into Virgin.
Though it will not require shares in the airline with founder Richard Branson and Delta Air Lines (DL) retaining 51% and 49% of the company respectively.
The Virgin Group recently completed the sale of 37.5 million shares in Virgin Galactic, the space tourism venture. Branson will likely uses some of those proceeds to fund hugely successful airline VS.
Restructuring and Next Steps for Virgin Atlantic
The airline recently announced they will restructure operations in a bid to cut costs. It will be forced to cut approximately 3,150 jobs and stop flights from London Gatwick according to City A.M.
The carrier is also going to cut the size of its fleet and retire older aircraft like the Boeing 747.
The Virgin Group pushed for direct support from the U.K. government but the Chancellor said in April that state aid to the airline would only be available to airlines “as a last resort.”
About the Virgin Group
The Group was founded in the 1970s and controls some 400 companies with a combined worth anywhere from £5-5.5bn according to various sources.
Virgin Atlantic started operations in 1984 and is a major player in transatlantic service to the continental United States.
This very popular summer route for VS has been largely impacted by COVID-19 and it might be quite a few months before it returns to full capacity once again.