Virgin Atlantic is racing to strike a $1.1 billion (£900 million) rescue deal that would help it survive the economic downturn brought about by the coronavirus pandemic, Sky News reported, without citing a source close to the negotiations.
The outlet said the airline, which was founded by British billionaire Richard Branson in 1984, has been in talks with stakeholders to reach an agreement on a rescue package worth at least £800 million ($987 million) and potentially as much as £900 million ($1.1 million) after it emerged that the government is reportedly unwilling to grant an emergency bailout.
Most of the package would not be new capital, but would help the company to defer fees and other payments owed by the airline. If the agreement is signed, it would provide the carrier with a comprehensive re-engineering of its balance sheet, allowing it to survive the worst scenarios predicted for the industry.
Branson himself raised $500 million by selling shares in Virgin Galactic, a space company that he founded. In March, the billionaire, whose wealth is estimated to be almost $5 billion, announced a $250 million package to save jobs. Since the coronavirus pandemic began, the company has furloughed thousands of its staff, while the firm’s executives agreed to substantial pay cuts. Last month, Virgin Atlantic announced it would cut 3,150 jobs, almost a third of its workforce, and cease flights from London's Gatwick Airport in order to focus on future flights at Heathrow and Manchester.
The air industry is among the sectors that have been hit the hardest by the coronavirus pandemic. European airlines have called for $35 billion dollars in state loans to help them survive the economic downturn, which experts have described as the worst since the Great Depression.
