Virgin Atlantic (VS/VIR) has filed for Bankruptcy Protection under Chapter 15 in the Southern District of New York today just hours after it told a London Court it would run out of money in September.
The filing does not mean the airline is bankrupt but is often seen as the last resort for companies trying to put together a rescue plan.
A rescue package totalling $1.6bn has been put together for the airline which is owned by Richard Branson’s Virgin Group and Delta Airlines but despite the majority of stakeholders being behind the deal, it has yet to be finalised.
In the Chapter 15 filing, lawyers for Virgin Atlantic say “While Virgin Atlantic has taken various measures to manage its liquidity in light of the unprecedented financial and operating conditions it faces, a more comprehensive recapitalization is necessary to secure the future of its business and ensure that it is able to meet its liabilities and funding requirements beyond mid-September 2020.“
Earlier today the airline told London courts that the airline would run out of money in September forcing it to fold if a rescue package isn’t finalised prompting the judge to approve plans for four creditor meetings on 25th August ahead of a final vote on the package.
Virgin Atlantic has recently resumed flying following a near total grounding due to the coronavirus pandemic but demand for global air travel is still way below levels seen prior to the pandemic and the airline has struggled to get bookings as consumer confidence remains low.
The airline has already cut thousands of jobs and retired its ageing Boeing 747 fleet as it seeks to recover.