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airhansa
Posts: 380
Joined: Wed Jan 08, 2020 3:18 pm

Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 4:45 am

Virgin is also a dying brand. I don't that it would be able to survive between low cost carriers and full service carriers as an airline without any differentials.
 
DobboDobbo
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 6:47 am

NWADTWE16 wrote:
typical responses, do you all work for BA? at least get some scratch for your trolling for them sheesh. Nice one VS, live on!


Agreed - just like the last thread it seems as soon as VS is mentioned on here the crayons come out.
 
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cv990Coronado
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 8:21 am

It appears as though the patient has been dripped some morphine but I doubt the patient will survive Covid-19 and the coming depression in air travel.
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tobsw
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 8:47 am

cv990Coronado wrote:
It appears as though the patient has been dripped some morphine but I doubt the patient will survive Covid-19 and the coming depression in air travel.


This. I have no personal link to VS neither BA. But VS is in a critical condition, and the "private bail-out" is not going to make things easier. As said earlier, they only get £370m new cash. It's not going to last for a long time... remember how airlines work (or better said, worked). They used to live on borrowed cash (from forward bookings). VS hasn't consistently refunded flight tickets since the end of march... including the peak Easter period, and of course, all the summer tickets. The problem is, VS has (mis)used that cash already...

It looks like the only one benefitting will be the hedge fund.
 
BealineV953
Posts: 188
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 9:35 am

FlyCaledonian wrote:
I can't find the news article but the BBC were reporting that the private equity loan is being secured against the landing slots at LHR.


The Sunday Times reported that Davidson Kempner Capital Management, the American hedge fund putting almost £200m of debt into the airline, would provide the cash in return for security over assets including Virgin's 27 pairs of LHR slots, accepting a ranking behind a group of pension funds that lent £220m against the slots.
Ever since childhood, when I lived within sight of London Airport, I have seldom seen a plane go by and not wished I was on it.”
With apologies to Paul Theroux - ‘The Great Railway Bazaar’
 
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cv990Coronado
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 9:54 am

BealineV953 wrote:
FlyCaledonian wrote:
I can't find the news article but the BBC were reporting that the private equity loan is being secured against the landing slots at LHR.


The Sunday Times reported that Davidson Kempner Capital Management, the American hedge fund putting almost £200m of debt into the airline, would provide the cash in return for security over assets including Virgin's 27 pairs of LHR slots, accepting a ranking behind a group of pension funds that lent £220m against the slots.


Heathrow slots are prized assets but even such an asset is likely to be devalued in the post-COVID-19 era. I guess they still see some value behind the £220 already used. I would think there must be saver gambles out there but I guess they see it differently.
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tobsw
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 11:58 am

Interesting article about the situation written by Robert Boyle, former IAGs strategy director.

https://www.gridpoint.consulting/blog/v ... as-changed

Last paragraph sums it up very well:

"In any event, the actual new money has reduced from an expected £450m to only £370m. More than all the increase in the package came in additional deferrals. So I still can’t see how this package will do anything more than defer the day of reckoning. Virgin Atlantic directors may have avoided the need to file immediately for insolvency and bought themselves some time, but this still looks to me like an airline that is running on fumes and is still a long way from any kind of safe place to land."
 
3AWM
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 2:05 pm

I don’t think this is a rescue package I think it’s a transitional arrangement. I think the funding only guarantees the refunds that VS will have to make for tickets in the next few months when itineraries cannot be fulfilled.
The statement about the fleet is also suitably vague; “The airline will operate a streamlined fleet of 37 twin engine aircraft.” This could be narrow bodies or props. No mention of the role for 787s going forward but A350s and on order A330s are mentioned.
VS services are centred around UK-US flights and feed from the Delta network. I don’t see a resumption of this anytime soon. In order to keep operating and service their slot portfolio they may need to fly radically different network. Indeed the statement says. “By 2022 Virgin Atlantic will fly the same number of sectors as 2019 despite its smaller scale.” I only see them doing this by flying shorter sectors – ie more domestic and European sectors.
I would not be surprised to a seriously paired down fleet, maybe even initially just to A350s with new aircraft coming in to the delivery schedule into 2022/23.
The full picture will only emerge when in late summer as I see it.
 
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piedmontf284000
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Re: Virgin Atlantic secures rescue package

Wed Jul 15, 2020 2:27 pm

MIflyer12 wrote:
piedmontf284000 wrote:
Sadly, most airlines haven't even begun to feel the full effects of the pandemic. It won't hit many of them for another six months or so.


What are you talking about? Passenger revenues don't have much farther to decline.


Airlines have been burning through cash reserves and offsetting losses by leveraging assets or borrowing which will start coming due. In addition, many airlines have received government aid which will be ending in a few months, ie the CARES act, and then the real hard decisions will come. Business travel will never be what it was pre covid. For some sectors, it's going to take years to get back to where it was, for other sectors, they will opt out of business travel all together. So again, some airlines haven't even begun to feel the full effects...
 
DobboDobbo
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Re: Virgin Atlantic secures rescue package

Fri Jul 17, 2020 8:28 am

skipness1E wrote:
I suspect the reason BA haven’t formally withdrawn the B744 yet is the idea that Virgin won’t survive the winter and with Norwegian effectively nowhere, they want to be in a position to grab market share for summer 2021.


Does todays retirement of the B744 mean that BA considers VS / Norwegian are likely to survive?
 
hammerb32
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Re: Virgin Atlantic secures rescue package

Fri Jul 17, 2020 8:53 am

DobboDobbo wrote:
skipness1E wrote:
I suspect the reason BA haven’t formally withdrawn the B744 yet is the idea that Virgin won’t survive the winter and with Norwegian effectively nowhere, they want to be in a position to grab market share for summer 2021.


Does todays retirement of the B744 mean that BA considers VS / Norwegian are likely to survive?


Very much doubt it, if VS or Norwegian didn't survive there would be a lot of long haul aircraft available that BA could get hold of.
 
DobboDobbo
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Re: Virgin Atlantic secures rescue package

Fri Jul 17, 2020 9:38 am

hammerb32 wrote:
DobboDobbo wrote:
skipness1E wrote:
I suspect the reason BA haven’t formally withdrawn the B744 yet is the idea that Virgin won’t survive the winter and with Norwegian effectively nowhere, they want to be in a position to grab market share for summer 2021.


Does todays retirement of the B744 mean that BA considers VS / Norwegian are likely to survive?


Very much doubt it, if VS or Norwegian didn't survive there would be a lot of long haul aircraft available that BA could get hold of.


Fair enough - just trying to understand the rationale of the OP.
 
MIflyer12
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Re: Virgin Atlantic secures rescue package

Fri Jul 17, 2020 10:01 am

piedmontf284000 wrote:
MIflyer12 wrote:
piedmontf284000 wrote:
Sadly, most airlines haven't even begun to feel the full effects of the pandemic. It won't hit many of them for another six months or so.


What are you talking about? Passenger revenues don't have much farther to decline.


Airlines have been burning through cash reserves and offsetting losses by leveraging assets or borrowing which will start coming due. In addition, many airlines have received government aid which will be ending in a few months, ie the CARES act, and then the real hard decisions will come. Business travel will never be what it was pre covid. For some sectors, it's going to take years to get back to where it was, for other sectors, they will opt out of business travel all together. So again, some airlines haven't even begun to feel the full effects...


Airlines have felt the effects... revenue can't go much lower. One can argue that airline employees haven't felt the full effects because carriers have been slow (optimistic thinking, govt grants, union negotiations) to resize for current and near-term demand.
 
airhansa
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Re: Virgin Atlantic secures rescue package

Fri Jul 17, 2020 10:18 am

MIflyer12 wrote:
piedmontf284000 wrote:
MIflyer12 wrote:

What are you talking about? Passenger revenues don't have much farther to decline.


Airlines have been burning through cash reserves and offsetting losses by leveraging assets or borrowing which will start coming due. In addition, many airlines have received government aid which will be ending in a few months, ie the CARES act, and then the real hard decisions will come. Business travel will never be what it was pre covid. For some sectors, it's going to take years to get back to where it was, for other sectors, they will opt out of business travel all together. So again, some airlines haven't even begun to feel the full effects...


Airlines have felt the effects... revenue can't go much lower. One can argue that airline employees haven't felt the full effects because carriers have been slow (optimistic thinking, govt grants, union negotiations) to resize for current and near-term demand.


Airlines may have considered that there would be a "V" shaped recovery, or there might be some sort of recovery sooner in the year, but it's highly likely that there won't be any recovery this year and that it won't be "V" shaped regardless of who gets into the government. Airlines will need to start implementing their plans once savings/aid has run out.
 
hampshireandy
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Re: Virgin Atlantic secures rescue package

Fri Jul 17, 2020 10:23 am

Didn't find it too hard to find funding after the UK government politely told them to go and take their begging bowl elsewhere
 
Rampvan
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Re: Virgin Atlantic secures rescue package

Sat Jul 18, 2020 8:15 pm

hampshireandy wrote:
Didn't find it too hard to find funding after the UK government politely told them to go and take their begging bowl elsewhere


Looks like the begging was being used elsewhere helping Wizz and Easy!
Silver dream machine
 
b747400erf
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 11:11 am

skipness1E wrote:
The US will be closed until the election at the earliest, winter travel will be well down on concerns around any second wave. It’s all about getting to summer 2021 alive. At least BA have domestic and European passengers to get the airline flying.


The election? The election is unrelated to the pandemic.
 
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Polot
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 12:35 pm

b747400erf wrote:
skipness1E wrote:
The US will be closed until the election at the earliest, winter travel will be well down on concerns around any second wave. It’s all about getting to summer 2021 alive. At least BA have domestic and European passengers to get the airline flying.


The election? The election is unrelated to the pandemic.

Not entirely. After election US response to the pandemic may change as politicians, especially the lame duck ones, will no longer have to do as much political grandstanding (done now to garner votes in November). Depending on election results those oppose to stricter control measures may soften their stand as they can blame the new administration/congress for any ill effects on their political base starting in January.
 
tobsw
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 1:11 pm

There´s also an implicit message by closing borders, suggesting it´s a "foreign" problem. Remember the US started by closing the borders to almost all EU countries.

Also, a big immigration message there, with suspending current visa for highly skilled workers.
 
panamair
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 1:16 pm

tobsw wrote:

Also, a big immigration message there, with suspending current visa for highly skilled workers.


This kind of slipped through the last few days, but apparently the US is now allowing some students (on certain types of student visas), specialized workers, academics, senior business leaders and executives etc back in the US from the Schengen area, UK, and Ireland. Non-essential tourist travel is still not allowed yet:

https://www.schengenvisainfo.com/news/u ... reland-uk/
 
peterinlisbon
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 2:00 pm

It was always a bit of a risky strategy to be so dependent on the US market. Before they used to be more diversified, with flights to Hong Kong, Shanghai, Cape Town etc. It's a shame they didn't keep that up.
 
panamair
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 2:33 pm

peterinlisbon wrote:
It was always a bit of a risky strategy to be so dependent on the US market. Before they used to be more diversified, with flights to Hong Kong, Shanghai, Cape Town etc. It's a shame they didn't keep that up.


How is having flights to HKG, PVG and CPT now in a Covid world going to help VS? You realize that all those three are pretty much closed to travel as well right now, don't you? HKG has re-implemented more restrictive measures now that they are seeing an uptick in cases again, and South Africa is now #5 in the world in total number of cases and the country will probably be shut to overseas travellers well into 2021..
 
majano
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 9:07 pm

panamair wrote:
peterinlisbon wrote:
It was always a bit of a risky strategy to be so dependent on the US market. Before they used to be more diversified, with flights to Hong Kong, Shanghai, Cape Town etc. It's a shame they didn't keep that up.


How is having flights to HKG, PVG and CPT now in a Covid world going to help VS? You realize that all those three are pretty much closed to travel as well right now, don't you? HKG has re-implemented more restrictive measures now that they are seeing an uptick in cases again, and South Africa is now #5 in the world in total number of cases and the country will probably be shut to overseas travellers well into 2021..

This is rubbish! South Africa, in fact no country, is going to be shut to the outside world for 18 months. Like Europe and elsewhere, once peak infections are behind, the economy will be opened to partners.
 
by738
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 9:10 pm

peterinlisbon wrote:
It was always a bit of a risky strategy to be so dependent on the US market. Before they used to be more diversified, with flights to Hong Kong, Shanghai, Cape Town etc. It's a shame they didn't keep that up.

But theres a reason they didn't keep that up as they got pumped at every quarter...
 
jetwet1
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 10:05 pm

tobsw wrote:
They are not getting a 1.2b cash influx. Read read read.


It's barely 370 million new cash.

This it how the 1.2 billion sum adds up:

"Shareholders are providing c.£600m in support over the life of The Plan including a £200m investment from Virgin Group, and the deferral of c.£400m of shareholder deferrals and waivers

Virgin Atlantic welcomes new partner Davidson Kempner Capital Management LP, a global institutional investment management firm which is providing £170m of secured financing

Creditors will support the airline with over £450m of deferrals"

https://corporate.virginatlantic.com/gb ... antic.html

Lots of deferrals and waivers. 370m is not going to make VS magically profitable. That's not going to help - sorry to tell that.


So it looks to me like the Virgin Group is waiving it's licensing fees for 2 years, remember, 0.7% of gross revenue goes to the Virgin Group from Virgin Atlantic, that's roughly £200m a year (and people wonder why VS was having a hard time making money in the good years).

tobsw wrote:
cv990Coronado wrote:
It appears as though the patient has been dripped some morphine but I doubt the patient will survive Covid-19 and the coming depression in air travel.


This. I have no personal link to VS neither BA. But VS is in a critical condition, and the "private bail-out" is not going to make things easier. As said earlier, they only get £370m new cash. It's not going to last for a long time... remember how airlines work (or better said, worked). They used to live on borrowed cash (from forward bookings). VS hasn't consistently refunded flight tickets since the end of march... including the peak Easter period, and of course, all the summer tickets. The problem is, VS has (mis)used that cash already...

It looks like the only one benefitting will be the hedge fund.


It's going to come down to, how much does the Virgin Group want to support VS through this, the Virgin Group has deep pockets.
 
peterinlisbon
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 10:35 pm

panamair wrote:
peterinlisbon wrote:
It was always a bit of a risky strategy to be so dependent on the US market. Before they used to be more diversified, with flights to Hong Kong, Shanghai, Cape Town etc. It's a shame they didn't keep that up.


How is having flights to HKG, PVG and CPT now in a Covid world going to help VS? You realize that all those three are pretty much closed to travel as well right now, don't you? HKG has re-implemented more restrictive measures now that they are seeing an uptick in cases again, and South Africa is now #5 in the world in total number of cases and the country will probably be shut to overseas travellers well into 2021..


Who says they only had to fly to those places? In any case the USA is no better now and COVID is not the only risk. Other events can also happen at any time that would interrupt travel to the USA, e.g. terrorism, volcanoes, Trump etc.
 
tofur
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Re: Virgin Atlantic secures rescue package

Sun Jul 19, 2020 11:07 pm

MIflyer12 wrote:
piedmontf284000 wrote:
MIflyer12 wrote:

What are you talking about? Passenger revenues don't have much farther to decline.


Airlines have been burning through cash reserves and offsetting losses by leveraging assets or borrowing which will start coming due. In addition, many airlines have received government aid which will be ending in a few months, ie the CARES act, and then the real hard decisions will come. Business travel will never be what it was pre covid. For some sectors, it's going to take years to get back to where it was, for other sectors, they will opt out of business travel all together. So again, some airlines haven't even begun to feel the full effects...


Airlines have felt the effects... revenue can't go much lower. One can argue that airline employees haven't felt the full effects because carriers have been slow (optimistic thinking, govt grants, union negotiations) to resize for current and near-term demand.


Exactly, you are spot on! Airline employees in certain countries have not felt the full effects, and I believe are essentially in denial. The airline I work for made the employee staffing cuts in June. These cuts will be coming to their respective carriers soon. It is difficult for sure, but I am glad the cuts were made sooner rather than later, pulling off the band-"aid" so to speak. The aid packages come at a cost for the airline.

We lost over 6,000 of our 10,000 members in our cabin crew department after early retirements and leave programs! The most junior cabin crew member left after the layoffs had 23 years of service. Of course it is devastating for those laid off. Interestingly enough in our social media platforms, most of those laid off feel the company made the right decision and feel confident they will be recalled to duties. We all hope and trust the company is taking the right direction to secure the airline and our future, by making the tough cuts and decisions earlier than our competitors.
 
airhansa
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Re: Virgin Atlantic secures rescue package

Mon Jul 20, 2020 7:17 am

There's a significant amount of competition on nearly all international routes. An exception are routes to the Carribbean.
 
Boeing74741R
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Re: Virgin Atlantic secures rescue package

Mon Jul 20, 2020 8:53 am

jetwet1 wrote:
It's going to come down to, how much does the Virgin Group want to support VS through this, the Virgin Group has deep pockets.


Yep. For as long as SRB is around and interested, you can bet that they will at least try to find a way, hence why they did what they did after the government refused support.

airhansa wrote:
There's a significant amount of competition on nearly all international routes. An exception are routes to the Carribbean.


There is BA for competition along with TUI to certain islands, particularly Barbados when the winter cruise season is in full swing (which I suspect will be a shadow of its usual self this year). There was also Thomas Cook before their demise.

That said, most of the destinations VS serve in the Caribbean are currently on the FCO's list of countries where travellers are exempt from having to self-isolate for 14 days upon arrival into the UK. Even though that won't match the scale of their US network, it's where I would look to concentrate resources for the next few months in addition to their pop-up cargo operations.
 
jonas12345
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Re: Virgin Atlantic secures rescue package

Mon Jul 20, 2020 8:55 am

jetwet1 wrote:

So it looks to me like the Virgin Group is waiving it's licensing fees for 2 years, remember, 0.7% of gross revenue goes to the Virgin Group from Virgin Atlantic, that's roughly £200m a year (and people wonder why VS was having a hard time making money in the good years).



£200m? That would imply VS revenues were £29bn per annum. I think you mean closer to £20m
 
KFLLCFII
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Re: Virgin Atlantic secures rescue package

Mon Jul 20, 2020 9:03 am

b747400erf wrote:
skipness1E wrote:
The US will be closed until the election at the earliest, winter travel will be well down on concerns around any second wave. It’s all about getting to summer 2021 alive. At least BA have domestic and European passengers to get the airline flying.


The election? The election is unrelated to the pandemic.


You have alot to learn about politics.
"About the only way to look at it, just a pity you are not POTUS KFLLCFII, seems as if we would all be better off."
 
jetwet1
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Re: Virgin Atlantic secures rescue package

Mon Jul 20, 2020 12:52 pm

jonas12345 wrote:
jetwet1 wrote:

So it looks to me like the Virgin Group is waiving it's licensing fees for 2 years, remember, 0.7% of gross revenue goes to the Virgin Group from Virgin Atlantic, that's roughly £200m a year (and people wonder why VS was having a hard time making money in the good years).



£200m? That would imply VS revenues were £29bn per annum. I think you mean closer to £20m


No, 3B pounds gross revenue.
 
MIflyer12
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Re: Virgin Atlantic secures rescue package

Mon Jul 20, 2020 2:00 pm

Hmm, mmm, and 0.7% of 3 Billion is 21 million. 0.7% as a brand licensing fee isn't crazy. You'll need to find something else to explain Virgin Atlantic's persistently poor returns.
 
Ishrion
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Virgin Atlantic Files For Chapter 15 Bankruptcy

Tue Aug 04, 2020 7:13 pm

Can't find any details at the moment, but it's being reported that Virgin Atlantic just filed for Chapter 15 Bankruptcy: https://twitter.com/DeItaOne/status/1290724722293039104
Last edited by Ishrion on Tue Aug 04, 2020 7:26 pm, edited 1 time in total.
 
strfyr51
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Re: Virgin Atlantic Files For Chapter 15 Bankruptcy

Tue Aug 04, 2020 7:26 pm

Ishrion wrote:
Can't find any details at the moment, but it's being reported: https://twitter.com/DeItaOne/status/1290724722293039104

I've heard of CH-11 and CH-7, But what is CH-15 of the Bankruptcy code and what is the advantage? And? Why is Virgin Atlantic filing in NYC??
 
tphuang
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:27 pm

This has to be the first time I've heard of chapter 15. I really hope people can explain what's going on. I'm too ignorant on this topic.
 
MIflyer12
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:27 pm

Ugh - Twitter as a source. If it's real in U.S. courts there will be a public record by the end of the business day.
 
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LAXintl
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:31 pm

Chapter 15 is when a non-U.S. debtor files for bankruptcy in the U.S. court system.

LATAM, Avianca, did the same.
Last edited by LAXintl on Tue Aug 04, 2020 7:32 pm, edited 1 time in total.
From the desert to the sea, to all of Southern California
 
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LAXintl
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:31 pm

From the desert to the sea, to all of Southern California
 
Ishrion
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:35 pm

MIflyer12 wrote:
Ugh - Twitter as a source. If it's real in U.S. courts there will be a public record by the end of the business day.


Well here's Reuters but there's not much else available right now:

https://www.reuters.com/article/virgin- ... SL4N2F64ER
 
strfyr51
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:38 pm

tphuang wrote:
This has to be the first time I've heard of chapter 15. I really hope people can explain what's going on. I'm too ignorant on this topic.


After reading up on it in Wikipedia. this replaced sect 304 of the bankruptcy code, I'm thinking this might be because Delta is heavily into Virgin Atlantic and VS might be wanting to preserve Delta's interest in their corporation. it does make sense to see it that way.
 
FlyingElvii
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:38 pm

LAXintl wrote:
Chapter 15 is when a non-U.S. debtor files for bankruptcy in the U.S. court system.

LATAM, Avianca, did the same.

Correct me if I am wrong, but there is no protection from creditors in the UK?

In the US, the bankruptcy code gives relief from creditors, and allows time to reorganize a plan to come out of bankruptcy.
 
davidjohnson6
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 7:44 pm

There are ways for companies in trouble to find ways to survive in the UK via bankruptcy-related pricesses, but if an airline files in the UK, it typically finds the CAA stops it from operating flights for passengers on the grounds that it can't afford proper maintenance for safe operation of flights
 
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Revelation
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 8:05 pm

Some stuff I found helpful:

The general procedure that has been followed in the bankruptcies of international companies by creditors located in different countries was for the creditors to use their local bankruptcy courts in an attempt to attach the assets of the bankrupted company that were located within the creditors' country and within the jurisdiction of the court, and as a result, often destroyed viable subsidiaries of the company. Furthermore, equal treatment of creditors was often thwarted, since the location and the value of assets that could be attached would often be less than the total value of creditors' claims in those locations.

One of the most important goals of chapter 15 is to promote cooperation and communication between U.S. courts and parties in interest with foreign courts and parties in interest in foreign proceedings involving assets and creditors in several countries. This goal is accomplished by, among other things, explicitly charging the court and estate representatives to "cooperate to the maximum extent possible" with foreign courts and foreign representatives and authorizing direct communication between the court and authorized estate representatives and the foreign courts and foreign representatives.

Ref: https://thismatter.com/money/credit/ban ... erview.htm

This suggests one files CH15 in the US when one is afraid going bankrupt in another jurisdiction will result in the creditors in that jurisdiction getting more favorable treatment than creditors outside that jurisdiction.

I guess it should be no surprise to readers of this forum that the US is the favored place for international companies to file bankruptcy.

IMO we're very experienced at suing each other, and our laws tend to favor the major corporate interests.

I don't think this bodes well for VS's line employees, sigh.

Didn't Sir Richard just put a bunch of his personal assets into the company? If so, he's now got a seat at the creditor's bench.
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Wake now, discover that you are the song that the morning brings
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ScottB
Posts: 6993
Joined: Fri Jul 28, 2000 1:25 am

Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 8:14 pm

LAXintl wrote:
Chapter 15 is when a non-U.S. debtor files for bankruptcy in the U.S. court system.

LATAM, Avianca, did the same.


Actually, it's when a non-U.S. debtor files for bankruptcy in the U.S. as an ancillary proceeding to a primary bankruptcy/insolvency filing in the debtor's home country. Avianca and LATAM both filed under Chapter 11 and as such the bankruptcy reorganizations for those carriers will be conducted through the U.S. courts. With Virgin Atlantic filing for Chapter 15 the reorganization or liquidation will be driven by a foreign court -- presumably in the U.K. but I could see them having filed in a U.K. dependency like Bermuda, the B.V.I., or one of Channel Islands if the laws are more favorable and they have a sufficient corporate presence.

tphuang wrote:
This has to be the first time I've heard of chapter 15. I really hope people can explain what's going on. I'm too ignorant on this topic.


It's relatively new and search engines are your friend here. Alitalia actually filed for Chapter 15 three years ago.
 
ScottB
Posts: 6993
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Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 8:23 pm

Revelation wrote:
I guess it should be no surprise to readers of this forum that the US is the favored place for international companies to file bankruptcy.

IMO we're very experienced at suing each other, and our laws tend to favor the major corporate interests.


Well, the U.S. has a well-established body of corporate law and the courts tend to be more functional than they are in many other jurisdictions. It's also akin to why lots of international companies list their equities in the U.S. -- the rule of law is fairly predictable and as such the capital markets are deep.

Moreover, U.S. bankruptcy code tends to be favorable to debtors in that it seeks to maximize the value of the bankruptcy estate rather than providing a faster return to creditors through liquidation of the debtor. A creditor with a reasonably sound business model can still face a liquidity crisis; in that case, the long-term return to creditors may be higher through a conversion of debt to equity or restructuring payments/maturities.
 
FluidFlow
Posts: 706
Joined: Wed Apr 10, 2019 6:39 am

Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 8:55 pm

Here it is pretty well explained what is going on. Virgin has money till September and is working on a rescue plan. The chapter 15 filing is to protect the assets during the time till the restructuring is done.

Virgin would fold because it would be forced to sell its LHR slots as liquidity drops below 75m£ what would end Virgins flying.

https://www.executivetraveller.com/news/virgin-atlantic-files-for-bankruptcy
 
Opus99
Posts: 980
Joined: Thu May 30, 2019 10:51 pm

Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 8:59 pm

FluidFlow wrote:
Here it is pretty well explained what is going on. Virgin has money till September and is working on a rescue plan. The chapter 15 filing is to protect the assets during the time till the restructuring is done.

Virgin would fold because it would be forced to sell its LHR slots as liquidity drops below 75m£ what would end Virgins flying.

https://www.executivetraveller.com/news/virgin-atlantic-files-for-bankruptcy

From the business insider as well, there are 4 creditor groups that need to agree to the plan. 3 have said they will in advance. I don’t know what happened to the 4th. I suspect this chapter 15 protection is to protect from the 4th creditor group taking action. I am not sure what will happen if the 4th does not agree to the deal
 
skipness1E
Posts: 4816
Joined: Sun Aug 19, 2007 9:18 am

Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 9:41 pm

The headlines across UK media are leading with Virgin Atlantic entering bankruptcy. Forward bookings while challenging before, will now fall to near zero. Game over.
There’s no way back without the US opening up and they don’t have deep enough pockets to get through what will be an awful winter.
The market has no confidence in VS, loyal customers have been screwed over on refunds being withheld worse than most other carriers and so that combination may end up being fatal. Once confidence goes, bookings die.
 
tphuang
Posts: 5212
Joined: Tue Mar 14, 2017 2:04 pm

Re: Updated: Virgin Atlantic seeks restructuring; files for BK in US Court

Tue Aug 04, 2020 9:58 pm

If confidence is gone, why would that final creditor still go forward with the plan? At this point, those LHR slots still have a lot of values. Creditors may end up with more return just by picking up the slots vs hoping that VS survives.

Normally, debtors don't just come to creditor once for debt forgiveness.

Also, why would VS do this unless it think there is a good chance that final creditor won't agree to the terms of restructuring?

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