Virgin Atlantic has agreed a "private-only" solvent recapitalisation of the airline, following the severe impact of the Covid-19 pandemic.
The airline has launched a court-backed process as part of a solvent recapitalisation of the airline and holiday business, with a restructuring plan that once approved and implemented, "will keep Virgin Atlantic flying".
The restructuring plan is based on a five-year business plan, and with the support of shareholders Virgin Group and Delta, new private investors and existing creditors, it is hoped the airline will rebuild its balance sheet and return to profitability from 2022.
The recapitalisation will deliver a refinancing package worth about £1.2 billion over the next 18 months in addition to the self-help measures already taken, including cost savings of £280 million per year and £880 million rephasing and financing of aircraft deliveries over the next five years.
Shareholders are providing £600 million in support over the life of the plan, including a £200 million investment from Virgin Group, and the deferral of £400 million of shareholder deferrals and waivers
Davidson Kempner Capital Management LP, a global institutional investment management firm, is providing £170 million of secured financing
Creditors will support the airline with more than £450 million of deferrals
The airline continues to have the support of credit card acquirers (Merchant Service Providers) Lloyd’s Cardnet and First Data.
To secure approval from all relevant creditors before implementation, the restructuring plan will go through a court-sanctioned process, with recapitalisation expected to come into effect late summer 2020.
From 20 July Virgin Atlantic will restart passenger flying.
Shai Weiss, chief executive, Virgin Atlantic, said: "Few could have predicted the scale of the Covid-19 crisis we have witnessed and undoubtedly, the last six months have been the toughest we have faced in our 36-year history.
"We have taken painful measures, but we have accomplished what many thought impossible. The solvent recapitalisation of Virgin Atlantic will ensure that we can continue to provide vital connectivity and competition to consumers and businesses in Britain and beyond.
"We greatly appreciate the support of our shareholders, creditors and new private investors and together, we will ensure that Virgin Atlantic can emerge a sustainably profitable airline, with a healthy balance sheet.
"Once our plan is approved, we will continue to focus on providing our customers with the service they have come to expect. Despite the incredible efforts of our teams, through cancelled flights and delayed refunds we have not lived up to the high standards we set ourselves, but we will do everything in our power to earn back their trust.
"While we must not underestimate the challenges ahead and the need to continuously respond to this crisis, I know that now, more than ever before, our people are what sets us apart. I have been humbled by their support and unwavering solidarity throughout. The pursuit of our vision continues and that is down to each one of them."
In May the airline reshaped and resized, reducing the number of people it employs by 3,550 across all functions.
Having closed its Gatwick base, "while retaining a slot portfolio at the airport to protect opportunities for future growth", leisure flying is now consolidated at Heathrow and Manchester.
By 2022 Virgin Atlantic will fly the same number of sectors as 2019 despite its smaller scale, it says.
The airline will operate a streamlined fleet of 37 twin engine aircraft following the retirement of 7 x 747s and 4 x A332s by Q1 2022, with rescheduled delivery of outstanding A350s and A339s.
The airline added sustainability remains central to it, and its simplified fleet will be 10% more efficient than it was pre-crisis.