Virgin Atlantic has seemingly secured its survival with the announcement of a privately funded solvent recapitalisation plan worth ?1.2 billion over the next 18 months, according to the airline.

The recapitalisation includes ?600 million in support from existing shareholders over the lifespan of the plan, including a ?200 million investment from Sir Richard Branson¡¯s Virgin Group and the deferral of around ?400 million of shareholder deferrals and waivers.

In addition, new shareholder Davidson Kempner Capital Management LP will provide ?170 million of secured financing, while creditors have agreed to support Virgin Atlantic with more than ?450 million of deferrals. The airline has also maintained the support of credit card acquirers Lloyd¡¯s Cardnet and First Data.

To ensure the recapitalisation can keep the airline flying, Virgin Atlantic is developing a restructuring programme based on a five-year business plan. The carrier had already implemented measures to cut ?280 million in costs per year, as well as ?880 million of rephasing and financing of aircraft deliveries over the next five years.

The rescue deal comes after the airline failed to agree an emergency loan as part of the UK government¡¯s Covid support measures and follows weeks of negotiations with existing and prospective shareholders. Branson injected US$250 million into Virgin Atlantic and Virgin Holidays in March and said he would sell shares in Virgin Galactic to raise extra cash for the travel businesses.

Virgin Atlantic said it hopes to return to profitability from 2022, but it expects capacity for the second half of 2020 to be reduced by at least 60 per cent compared to 2019. It said flying fell 98 per cent in Q2 and roughly 80 per cent of its staff were placed on furlough under the government¡¯s job retention scheme. ?

The airline announced in May that it would make 3,550 employees redundant as a result of the coronavirus pandemic and has closed its Gatwick base, though it has retained its slot portfolio at the airport to ¡°protect opportunities for future growth¡±. The cuts mean Virgin Atlantic now only serves Heathrow and Manchester in the UK.

Virgin Atlantic will resume passenger flights from 20 July and will gradually increase its services between August and October.

CEO Shai Weiss commented: ¡°Few could have predicted the scale of the Covid-19 crisis we have witnessed and undoubtedly, the last six months have been the toughest we have faced in our 36-year history. We have taken painful measures, but we have accomplished what many thought impossible. The solvent recapitalisation of Virgin Atlantic will ensure that we can continue to provide vital connectivity and competition to consumers and businesses in Britain and beyond.

¡°Once our plan is approved, we will continue to focus on providing our customers with the service they have come to expect. Despite the incredible efforts of our teams, through cancelled flights and delayed refunds we have not lived up to the high standards we set ourselves, but we will do everything in our power to earn back their trust.

¡°While we must not underestimate the challenges ahead and the need to continuously respond to this crisis, I know that now, more than ever before, our people are what sets us apart. I have been humbled by their support and unwavering solidarity throughout. The pursuit of our vision continues and that is down to each one of them.¡±