Virgin Atlantic declared itself bankrupt in a New York court yesterday seeking protection from creditors.
Working under the US Chapter 15 bankruptcy code, Virgin Atlantic can look to shield assets in the US through this process. Non-US companies frequently use chapter 15 to stop creditors filing claims on assets held in the US.
The airline is fighting the ongoing impact from Covid-19 around the world.
Virgin Australia earlier this year in April went into administration with debts of circa $7 billion. In the UK Virgin will no longer operate from Gatwick and have shed over 3,500 jobs.
Richard Branson’s Virgin Group owns 51% of Virgin Atlantic and 49% is owned by US airline Delta. Branson courted much criticism earlier this year when he sought a bail-out from UK Government that was refused.
Last month Virgin Atlantic said it had secured support from shareholders that removed the need for government support and is understood to be undergoing a reorganisation programme through the next 18 months.
With the International Civil Aviation Organization predicting a fall in airline revenues of $4 – $5 billion in the first quarter of 2020. Virgin’s reorganisation programme will surely look at further lightening the airline’s costs ahead of expectations in rising revenues.
The strength of the Virgin brand could be one advantage here in stabilising the business, as consumers worldwide still recognise and respect it.
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Virgin Atlantic bankruptcy New York – 5 August 2020 – Virgin Atlantic bankruptcy New York