Virgin Atlantic creditors to vote on $1.6b rescue plan

Bloomberg

Virgin Atlantic Airways Ltd is set to find out whether it has enough support from creditors for a 1.2 billion-pound ($1.6 billion) rescue or if it will need a judge to overrule them in order to stave off collapse.
The UK carrier founded and controlled by billionaire Richard Branson has already secured the backing of three creditor classes and is now seeking approval from the fourth, comprising trade suppliers, in a vote.
Support from the suppliers would eliminate the last potential obstacle to Virgin’s proposal ahead of a legal hearing next week. Should the creditors vote against the plan, the airline will have to persuade a judge, who under a new UK procedure can rule that a restructuring is preferable to insolvency even without the support of all relevant parties.
The 36-year-old airline, which operates a fleet of 40 wide-body planes, reiterated that it remains “confident in the plan” and that it will be signed off.
Virgin saw demand cut to a quarter of 2019 levels in the first half of the year as the coronavirus pandemic brought travel to a near standstill. It employs 6,500 people after slashing more than 30% of its staff, part of an airline worker toll of about 75,000 across Europe.
Like other long-haul specialists, the Crawley, England-based airline is continuing to suffer as a recovery in inter-continental traffic is held back by travel restrictions in markets including the US.
CEO Shai Weiss has said that the company will run out of cash next month without the rescue, which includes new financing from Branson and US hedge fund Davidson Kempner Capital Management.
Virgin Atlantic, which is closely held, needs to win support from 75% of trade creditors by value, with voting power weighted in favour of those owed the most money, a spokeswoman said.
That group comprises fewer than 200 parties after Virgin exempted very small and several large firms from the process. Only a handful say they want to dial into the video meeting and most votes have already been cast, she said.
According to the proposals, the suppliers will take a 20% haircut, with 10% of the balance paid in cash and the rest issued in quarterly sums through September 2022.