The news that Virgin Atlantic has secured private recovery funding has to be good news, especially for Barbados and throughout the Caribbean. The thought of returning to a single air carrier ‘monopoly’ on any given route nowadays is simply not desirable, if we are going to ever contemplate operating in a competitive tourism world.
According to multiple sources the private-only rescue deal with shareholders and creditors is worth US$1.5 billion and intended to secure the airline’s future beyond the coronavirus crisis. The restructuring plan was supported by a majority of shareholders and is expected to come into effect in late summer 2020. Much of the funding will come from existing shareholders – the Virgin Group will invest GB Pounds 200 million with Delta Airlines and others deferring or waiving outstanding payments.
A new investor, the hedge fund Davidson Kempner Capital Management will lend a quoted GB Pounds 170 million. Virgin Atlantic said ‘the deal will pave the way for the airline to return to profitability in 2022’. To secure approval from all relevant creditors before implementation, the proposed plan will go through a court-sanctioning process with recapitalization expected to come into effect during late summer 2020.
Commenting on the news, Shai Weiss, Virgin Atlantic’s Chief Executive Officer (CEO) stated ‘the last six months have been the toughest we have faced in our 36 year history. We have taken painful measures, but we have accomplished what many thought impossible’.
Virgin’s flights will resume later this month from London’s Heathrow and Manchester airport, with the possibility of increased connectivity. Once the massive Crossrail project and the new Elizabeth Line become fully operational it will become substantially easier and quicker for many people to access the London flight departure point. The installation of new ultra violet sanitation equipment together with existing facial recognition, thermostat reading technology and contactless security procedure at Heathrow will also give enhanced safety assurance to the travelling public.
Virgin Atlantic’s original appeal to the British Government for economic assistance fell on deaf ears despite the fact that it is one of the largest beneficiaries through the collection of the Advanced Passenger Duty (APD) and other taxes. We are now left to wonder if this hugely deterrent levy with be reduced or totally eliminated to give Virgin and other airlines the hope for long term survival.
Virgin’s retirement of their last four-engine fleet of B747 and A340’s will also enable them to put more fuel efficient aircraft on many routes which could well mean that Barbados will be served by the B787 Dreamliner, from Heathrow, ensuring a faster flight time and increased seat availability over the previously used A330’s that operated from Gatwick.
The Virgin brand has developed an enviable and incredibly loyal following over decades. Let us hope that this latest development will help drive many returning visitors over the months to come.