Virgin Atlantic could 'run out of money' by end of September
Virgin Atlantic could run out of money by the end of September if creditors do not approve a £1.2 billion bailout package, a court has heard.
Without a restructuring and injection of new cash, it is projected that the airline's cash flow would drop to "critical levels" by the middle of next month and it will "run out of money altogether" by the week beginning September 28.
At a High Court hearing on Tuesday, David Allison QC, for Virgin Atlantic Airways Limited, told Mr Justice Trower that the Virgin Atlantic Group has "a fundamentally sound business model which was not in any problems at all before the Covid-19 pandemic".
In a connected move later on Tuesday, Virgin Atlantic filed for protection in a US federal bankruptcy court in New York.
A spokeswoman for Virgin Atlantic said the Chapter 15 bankruptcy filing was part of a court process in the UK to carry out the restructuring plan announced last month. The process was supported by a majority of the airline's creditors, and the company hoped to emerge from the process in September, she said.
Announcing the bailout package last month, the airline said their plan includes £200 million provided by founder Sir Richard Branson's Virgin Group and support from Delta Air Lines - which owns 49% of Virgin Atlantic.
The package is worth £1.2 billion over the next 18 months and is in addition to measures already taken, such as cost savings of around £280 million per year and amending aircraft deliveries over the next five years.