By Associated Press
NEW YORK — Virgin Atlantic, the airline founded by British businessman Richard Branson, filed Tuesday for relief from creditors as the virus pandemic hammers the airline industry.
The airline made the filing in U.S. federal bankruptcy court in New York after a proceeding in the United Kingdom.
A spokeswoman for Virgin Atlantic cast the Chapter 15 bankruptcy filing as part of a court process to carry out a restructuring plan that the airline announced last month. The process is supported by a majority of the airline’s creditors, and the company hopes to emerge from the process in September, she said.
Virgin Atlantic’s move follows bankruptcy filings in the U.S. by Latin America’s two biggest airlines, Latam and Avianca, and by Mexico’s Aeromexico since the start of the pandemic. Virgin’s sister airline Virgin Australia filed for protection from creditors in its home country in April.
Airlines have been slammed by the coronavirus outbreak that has led to travel restrictions and left many people afraid to fly. The International Air Transport Association, a trade group for global airlines, estimates the industry will lose $84 billion this year and revenue will drop by half from 2019 levels.
Branson had appealed to the British government for financial help. Virgin Atlantic said last month that it raised 1.2 billion pounds ($1.8 billion) from private sources including Branson to shore up its battered finances.
Atlanta-based Delta Air Lines /zigman2/quotes/200327741/composite DAL -0.10% , which owns 49% of the airline, agreed to defer payments it was owed, and hedge fund Davidson Kempner agreed to lend Virgin Atlantic 170 million pounds.