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Virgin Atlantic has secured £400 million in new investment
from existing shareholders Virgin Group and Delta Air Lines as it continues on
the road to recovery during the Covid-19 crisis.
The airline said the investment will help it emerge from the
pandemic “in a strong financial position and with a bolstered balance sheet”,
along with an agreement with creditors to reduce its cash burden by £200
million through 2024 and more than £300 million of cost savings.
£240 million of the new money is coming from Virgin Group,
while the remaining £196 million is from Delta. The investment will not change
the ownership structure of Virgin Atlantic, according to the carrier.
The investment comes after Virgin Atlantic completed a £1.2 billion recapitalisation, including a £200 million investment from founder
Richard Branson, an £880 million reduction in its five-year fleet capex spend and
a 45 per cent reduction in the size of its workforce.
Virgin Atlantic is predicting a return to sustainable
profitability from 2023. It said the re-opening of travel between the UK and US
in November has led to “robust trading” for Easter and summer 2022.
The airline has fully financed aircraft deliveries through
Q2 2024, meaning it is still on track to achieve a 100 per cent
next-generation, fuel-efficient fleet in early 2027.
CEO Shai Weiss said: “Our story has been well documented
during the pandemic. 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.”
Meanwhile, Delta is also investing in partner airlines
Aeromexico and LATAM, with the total investment including Virgin Atlantic
totalling $1.2 billion. Through the cash injections, Delta is targeting a 20
per cent equity stake in Aeromexico and a 10 per cent stake in LATAM.