Virgin Atlantic Airways filed for Chapter 15 bankruptcy in New York on August 3, according to reports in Business Insider.
Chapter 15 is a similar process to Chapter 11, used to protect US assets of a partially foreign-owned company while it works to secure funding to stay in business.
Delta CEO Ed Bastian reportedly said the airline would not increase its cash stake in Virgin Atlantic, which is already 49 percent-owned by Delta. A deeper ownership by Delta would not be allowed by UK foreign ownership regulations, the report said.
Virgin Atlantic’s press statement on its restructuring published on July 14 said that the airline’s five year business plan would be infused with funds from “new private investors” and that it would pave the way “for the airline to rebuild its balance sheet and return to profitability from 2022.”
Virgin said that new partner Davidson Kempner Capital Management LP, a global institutional investment management firm, would provide £170 million ($224 million) of secured financing, among other assets.
Virgin customers will find a trimmed-down airline operating with reduced employees (Virgin has reduced its employee base across all functions by about 3,550), a shuttered London Gatwick base and a leaner fleet of 37 twin engine aircraft.
Virgin says that “sustainability remains central to the airline, and its simplified fleet will be 10 percent more efficient than it was pre-crisis.”
Shai Weiss, Virgin’s CEO said in the statement, “We have taken painful measures, but we have accomplished what many thought impossible. The solvent recapitalization of Virgin Atlantic will ensure that we can continue to provide vital connectivity and competition to consumers and businesses in Britain and beyond.”