Richard Branson’s Virgin Atlantic files for bankruptcy

The economic tsunami occasioned by the coronavirus pandemic is drowning the global aviation industry as Virgin Atlantic, founded by billionaire Richard Branson, files for bank bankruptcy in the United States.

BBC reports that in the company’s court filing, it is seeking protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country.

According to the filing, Virgin Atlantic had negotiated a deal with stakeholders “for a consensual recapitalization” that will get take it out of debt and “immediately position it for sustainable long-term growth”.

The development comes barely a month after the company said it had agreed to a rescue deal worth £1.2 billion ($1.6bn) to keep it in business beyond the Covid-19 crisis.

It was reported that the airline’s parent company, Virgin Group, injected £200 million, with additional funds provided by investors and creditors.

It is however not clear if the current economic crisis would undermine the investment.

Similarly, the new owners of Virgin Australia, Bain Capital, a US private equity group, had in May 2020 said it would cut over 3,000 jobs in the UK and close its operation at Gatwick airport.

Bain Capital acquired Virgin Australia in May, a month after Virgin announced that it was into voluntary administration as the pandemic forced it out of flying business.

Virgin Atlantic is owned by Virgin Group with 51% stake while Delta airline owns 49% of the business.

Meanwhile, in Nigeria, two airlines terminated the appointments of over 100 pilots. They also slashed salaries by up to 40%, blaming it on the Covid-19 pandemic.

Air Peace reportedly laid off 70 pilots and cut staff salaries while Bristow Nigeria also fired 100 of its pilots and engineers, describing the move as “painful, but decisive step” to keep it in business.