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Coronavirus: Virgin Atlantic attempts to secure £1m rescue deal

Abigail Fenton
·2-min read
A Virgin Atlantic plane coming in to land at Heathrow Airport. (Steve Parsons/PA Wire/PA Images)
A Virgin Atlantic plane coming in to land at Heathrow Airport. Photo: Steve Parsons/PA Wire/PA Images

Virgin Atlantic Airways is in the process of attempting to secure the support of American payments group First Data in order to land a £1m ($1.39m) rescue deal, according to reports.

Sky News reported that First Data has made “stringent” demands in return for backing Sir Richard Branson’s airline — namely, that it gets to hold on to all future bookings revenue, to “protect itself” should Virgin collapse.

This deal could potentially save thousands of British jobs in the airline industry.

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Virgin is expected to announce the rescue deal outline next week, Sky said.

Hedge fund David Kemper Capital Management has already “broadly agreed” to negotiations regarding a significant cash injection.

The airline is seeking over £500,000 in debt and equity funding due to economic damage caused by the COVID-19 pandemic.

First Data’s demands are similar to those made by merchant acquirers shortly before Exeter-based airline Flybe’s collapse in March.

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Lloyds Bank’s Cardnet has “broadly agreed” to terms put forth by Virgin Atlantic, one of Sky’s insiders claimed.

The endorsement of Cardnet and First Data are "the final piece of the jigsaw" in securing a package that would allow Virgin Atlantic to continue trading and save thousands of UK jobs, they added.

However, without this backing, Virgin Atlantic risks collapsing into administration.

The financial restructuring would include a £200m capital injection from Branson’s Virgin Group, and £400m in fee deferrals and waivers from Virgin Group and Delta Air Lines, which owns 49% of the company.

The survival of Virgin Airlines has been hanging in the balance since the coronavirus pandemic triggered global groundings and halted air travel.

In May Branson took other measures to secure the future of Virgin by selling a stake in the Galactic space business.