Virgin Atlantic Prepares For Potential Insolvency

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Virgin Atlantic that battles with liquidity issues and was denied its first loan guarantee application by the UK government (read more here), and could run out by the end of May (read more here), is preparing for the worst.

Virgin Branson

The airline has hired, according to the Sky News, advisers that could take over if the airline needs to enter insolvency.

You can access Virgin Atlantic here.

Here’s an excerpt from the Sky News (access their piece here):

Sky News has learnt that Virgin Atlantic retained Alvarez & Marsal (A&M), a restructuring specialist, earlier this week to assemble contingency plans for an insolvency process at the airline.

Sources said this weekend that A&M’s work would be focused on options for a pre-pack administration that would see a restructured and financially viable carrier emerge from the COVID-19 crisis.

A pre-pack deal would wipe out the equity of existing shareholders – Sir Richard’s holding company and Delta Air Lines.

Here are some recent Virgin Atlantic pieces:

Richard Branson Virgin

Virgin Atlantic Lays Off Third Of Its Employees & Ends Gatwick Operations

Virgin Atlantic Richard Branson

Guardian’s Today In Focus: “Should the UK bailout Richard Branson’s Virgin Atlantic? “

Virgin Atlantic Collapses By The End Of May Unless New Cash Found

Richard Branson Virgin

Virgin Atlantic Collapses Unless UK Government Chips-In

Conclusion

Sir Richard has been somewhat invisible as of late regarding Virgin Atlantic restructuring after an appeal for support from his tax haven residence in the British Virgin Islands was not well received by the public. He has become a liability for the survival of the airline.

I wouldn’t read too much into this having designated insolvency advisers on hand just in case the management and the board are not able to secure more financing. It is a prudent thing to prepare for the worst, like what happened to Virgin Australia.

Let’s hope that Virgin Atlantic can survive without going through an administration that would wipe out the equity owners (Richard Branson and Delta Air Lines), and would see the airline sold to the highest bidder.

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