Virgin Atlantic files for asset protection in the United States
Virgin Atlantic has filed for bankruptcy protection concerning its activities in the United States while it is still waiting for approval for its rescue plan of £1.2 billion announced in July 2020.
The British-based company filed for Chapter 15 bankruptcy protection in a New York court on August 4, 2020. This will prevent its American assets to be seized by creditors while Virgin Atlantic figures out a way to raise enough funds to continue operating.
Virgin Atlantic gradually resumed flying from its London-Heathrow base (LHR) to the United States and Asia from July 20, 2020, after a three-month break.
After both the United Kingdom government and its main shareholder Delta Air Lines had refused to assist the airline financially, Virgin Atlantic hoped to be out of the woods when it announced a £1.2 billion ($1.57 billion) lifeline from private investors in July 2020. The airline plans to cut annual costs by $280 million and intends to lay off more than 3,000 workers.
But with the arrangement still not in action as the creditors are set to deliberate on August 25, 2020, a lawyer of the company declared in a hearing that it could run out of cash by September 2020.
In April 2020, Virgin Australia, another Branson-owned airline, entered administration due to the financial woes brought by the COVID-19 pandemic. On August 5, 2020, it revealed a restructuring plan that includes mass layoffs, a fleet recomposition, and discontinuation of its subsidiary Tigerair Australia.
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