Virgin Atlantic filed for Chapter 15 bankruptcy protection in New York on Tuesday as the COVID-19 pandemic hammers the airline industry.
The airline, founded by British businessman Richard Branson, made the filing in U.S. federal bankruptcy court after a proceeding in the United Kingdom.
A spokesperson for Virgin Atlantic says the bankruptcy is part of a court process to carry out a restructuring plan that the airline announced last month.
Several airlines have been pushed to similar outcomes by the pandemic. Latin America’s two biggest airlines, LATAM and Avianca, filed for bankruptcy protection, as well as Mexico’s Aeromexico. Virgin’s sister airline, Virgin Australia, filed for protection from creditors in its home country in April.
The International Air Transport Association, a trade group for global airlines, estimates the air travel industry will lose $84 billion US this year, and that revenue will drop by half from 2019 levels.
Branson had appealed to the British government for financial help. Virgin Atlantic said last month that it raised $1.8 billion Cdn from private sources, including Branson himself, to shore up its battered finances.
Atlanta-based Delta Air Lines, which owns 49 per cent of the airline, agreed to defer payments it was owed, and hedge fund Davidson Kempner agreed to lend Virgin Atlantic $128 million Cdn.