The British Airline Pilots’ Association has welcomed a deal thrashed out this week by Virgin Atlantic to remain solvent throughout the Covid-19 crisis.
This Tuesday, Virgin Atlantic moved a step closer to completing a restructuring devised to secure its future beyond the coronavirus crisis, with remaining creditors voting in favour of a UK£1.2 bn rescue plan.
The deal had already been approved by major creditors in July, and this week’s vote is reported to have come from a number of suppliers to which the airline owed money.
BALPA General Secretary Brian Strutton welcomed the deal, but criticised the government’s handling of the affair: “BALPA welcomes the creditor backing for Virgin Atlantic’s recovery plan which should mean it gets court approval on 2nd September, thereby protecting 6,500 UK jobs for the time being. It’s a shame the UK Government wouldn’t help Virgin and frankly, unless the Government starts supporting the aviation industry soon, there will be more job losses and in airlines and regional airports.”
The debt restructuring should help the airline remain solvent for the next 18 months and thus avoid going into administration. In order to complete the private-only, solvent recapitalisation of the airline, the restructuring plan is going through a court-sanctioned process under Part 26A of the UK Companies Act 2006.
“We remain confident that the plan represents the best possible outcome for Virgin Atlantic and all its creditors and believe that the court will exercise its power to sanction the Restructuring Plan, at a hearing scheduled on 2 September,” said a spokesperson for Virgin Atlantic in a press release.
“A US Chapter 15 procedural hearing will follow on 3 September, ensuring Virgin Atlantic’s Restructuring Plan is recognised in the US, paving the way for the £1.2bn private only, solvent recapitalisation of Virgin Atlantic.”
The airline, which is half-owned by Richard Branson’s Virgin Group and half by Delta Airlines in the US, said all four of its creditor classes had voted in favour of the proposal.