MIAMI – The English High Court has approved Virgin Atlantic’s (VS) restructuring plan, worth US$1.6bn. The decision also unblocks additional funding. As Judge Richard Snowden green-lit the plan, the airline expects to make the ruling effective by the end of the week.
Last week, VS shareholders, creditors, and aircraft lessors voted in favor of the plan. Hence, the next step was to get the Court’s approval. Following the court-sanctioned process, a US procedural hearing is now on the horizon. This will pave the way for the plan to be recognized in the US.
Implications of the Restructuring Plan
Regarding the approval, a VS spokesperson said that the airline achieved a milestone. Under this process, VS is in a position to rebuild its balance sheet and restore customer confidence.
As a result of the court’s decision, the company will receive cash injections but will have to implement cost-saving measures and reschedule aircraft deliveries to get back to profitability.
Additionally, VS will receive £170m of secured financing and £600m of shareholder support. The first injection will come from Davidson Kempner Capital Management. The second one will be provided through Virgin Group and shareholder deferrals and waivers.
Featured image: Virgin Atlantic A320. Photo: RHL Images.