Virgin Atlantic is shoring up its balance sheets ahead of what promises to be a long winter ahead. Well, at least for those whose offices don’t reside in No. 10 Downing St, where warm and boozy parties never went out of fashion.
With controversial new restrictions imposed on top of already controversial travel bans, the airline has received a cash injection of £400m from the Virgin Group and Delta Airlines, which continue to own a respective 51% and 49% stake.
The news should help to alleviate any fears, as airlines which seemed poised to reemerge from the pandemic are now thrust into yet another turbulent time, with governments unable to create sustainable goal posts for travelers.
Virgin Atlantic Receives Fresh Cash
In the UK, the UK Government seems hellbent on destroying the aviation industry. The UK Transport Minister, Grant Shapps, recently said any additional restrictions on travel would cripple the industry, before announcing new restrictions just a day later.
Unlike other countries, lack of blanket industry support across the UK aviation sector has forced airlines to pursue individual avenues of funding and liquidity, from credit facilities and new floats.
Virgin just received £400m in additional capital and liquidity from private backers.
Some might say that’s more equitable for the public, but in terms of creating a robust industry in a global environment, it’s certainly not keeping up with offerings from most foreign governments where aviation plays as vital of a role, as it does in the UK.
£400m Cash Injection
Delta is injecting liquidity into airline partners AeroMexico, LATAM and Virgin Atlantic, as it looks to maintain its ambitious position as a global leader in connectivity. As part of the move, Delta will invest $1.2 billion to maintain or bolster stakes in each.
The Virgin Group, helmed by Richard Branson, will maintain its 51% majority owner stake and Delta will remain a 49% partner, with each investor upping its investment by £204m and £196m to help raise liquidity.
Virgin has now completed more than £1.5 billion in recapitalization, which most recently also included reducing its credit burdens significantly, by over £200m. New aircraft deliveries are now fully financed through 2024 and the airline will have a 100% next generation fleet by 2027, offering greater fuel efficiency.
A Sigh Of Relief For Everyone
Virgin Points should be safe, flights too, and hope for future holidays as well.
There’s no reason to pop the corks, yet, but Virgin Atlantic appears to have created the funding needed to make it through yet another turbulent season of flight cancellations and dwindling demand.
November 8th saw the historic reopening on the US, a vital travel market for Virgin, but fresh government incompetence restrictions will now delay much of the long awaited return of pent up demand, at least until better weather returns.
Clearly, Virgin’s partners believe that as brighter days do finally come into forecast, the airline is one of the best poised to continue to “win” the trend of leisure travelers, with strong experiences from economy to premium and Upper Class.
Interesting that Virgin Atlantic is receiving investment from Delta at the same time that Virgin Australia is dumping partner Delta in favor of United.
Very pleased about this. I have a lot of miles with VS and was concerned last year that they may not survive. I fully agree with your observations on governmental performance.