Virgin Atlantic Airways, founded by the U.K. entrepreneur Richard Branson, filed for bankruptcy protection, as it, like other airlines, continues to suffer from the coronavirus pandemic.
Virgin filed for Chapter 15 bankruptcy in New York. That allows foreign companies with U.S. assets to shield themselves from creditors while they pursue a recovery effort in their home base.
The company seeks to complete a rescue operation that has received a thumbs-up from most of its stakeholders. Virgin is looking for a 1.2 billion-pound ($1.6 billion) package, as announced in July.
Virgin hopes to pass through the restructuring in September, A Virgin spokeswoman told MarketWatch.
Delta allowed Virgin to defer payments to it, and hedge fund Davidson Kempner has consented to lend Virgin Atlantic 170 million pounds, according to MarketWatch.
Virgin’s reservations have plunged 89% so far this year from a year earlier, and passenger demand for the second half has slumped to about 25% of 2019 levels, according to court papers, Bloomberg reports.
“The group and its business have been adversely affected by the ongoing covid-19 pandemic, which has caused an unprecedented near-shutdown of the global passenger aviation industry,” the court papers said.
“Global aviation was one of the first industries to be impacted by the covid-19 pandemic and is likely to be one of the last to fully recover.”
Part of a government bailout of U.S. airlines that is allowing them to pay their workers expires Sept. 30. And without some kind of renewal, the airlines are expected to dismiss tens of thousands of employees.