Richard Branson, Delta provide further funding for Virgin Atlantic
Virgin Group and Delta Air Lines have invested a combined £400 million ($528 million) in Virgin Atlantic as the British carrier plots recovery from the COVID-19 pandemic.
Virgin Group, owned by entrepreneur Richard Branson, is investing £204 million ($269 million), while Delta is providing £196 million ($259 million). That keeps their stakes at 51% and 49% respectively.
“The investment positions Virgin Atlantic to emerge from the COVID-19 pandemic in a strong financial position and with a bolstered balance sheet, ready to capitalise on market opportunities as demand returns,” Virgin Atlantic commented in a statement published on December 13, 2021. The airline expects to return to profitability in 2023 and said it continues to have the support of creditors and credit card merchants.
Virgin Atlantic has raised cash several times to see it through the COVID-19 pandemic, with its core transatlantic routes being hit hard by tight US border restrictions.
The airline carried out a £1.2 billion recapitalization in September 2020, plus raised around £300 million in financing in the first quarter of 2021. As part of those measures, it has reduced spending on its fleet and cut its workforce by 45%.
“Our story has been well documented during the pandemic,” chief executive Shai Weiss commented. “Together with our people, we have proven that we have what it takes to emerge a stronger airline. Throughout, our shareholders Virgin Group and Delta Air Lines, and our creditors, have been a source of unwavering support.”
Delta CEO Ed Bastian stated: “Virgin Atlantic’s business has transformed, allowing them to emerge from the pandemic a stronger airline.”
The British carrier, founded by Richard Branson in 1984, has been helped by the opening of US borders on November 8, celebrating with a parallel takeover from London Heathrow with rival British Airways.
Virgin Atlantic said in the December 13 statement that it was benefitting from pent-up customer demand and “robust trading for Easter and summer 2022”.
It remains to be seen how the emergence of the Omicron variant will affect airlines like Virgin Atlantic. The US and the UK have already tightened testing requirements for travelers.
The British airline commented in the press statement that “Virgin Atlantic is in a strong position to rapidly capitalise on opportunities as demand returns, and to withstand a further downturn in air travel”.
The funding for Virgin (VAH) is part of an overall $1.2 billion investment in partner airlines by Delta. Separately, Virgin Australia announced it was ending a partnership with Delta in favor of a new deal with United Airlines.
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