Virgin Atlantic airline files for US bankruptcy protection

Richard Branson's Virgin Atlantic airline is seeking protection from creditors as it tries to survive the pandemic that is slamming air travel

NEW YORK -- Virgin Atlantic, the airline founded by British businessman Richard Branson, filed Tuesday for protection in U.S. bankruptcy court as it tries to survive the virus pandemic that is hammering the airline industry.

A Virgin Atlantic lawyer said in a court filing that the company needs an order from a U.S. court to make terms of the restructuring apply in the U.S.

The airline is primarily a long-haul operator, including flights between the U.K. and the U.S. It stopped flying in April due to the pandemic and only resumed flights in July. It closed a base at London's Gatwick Airport and cut about 3,500 jobs.

Branson appealed to the British government for financial help earlier this year — even saying that he would pledge his Caribbean island resort as collateral for a loan — but was rebuffed.

Last month, Virgin Atlantic announced that it had put together a deal to raise 1.2 billion pounds (nearly $1.6 billion at current exchange rates) from private sources, including 200 million pounds from Branson's Virgin Group.

Atlanta-based Delta Air Lines, which owns 49% of the airline, agreed to defer payments it was owed, and hedge fund Davidson Kempner agreed to lend Virgin Atlantic 170 million pounds. Virgin Atlantic also delayed deliveries of Airbus jets.

Branson founded and still holds a 10% stake in Virgin Australia, which has announced plans to shed a third of its workforce as it scales back operations as part of its restructuring.

The airline, Australia’s second-largest carrier, sought bankruptcy protection and its administrator Deloitte’s has entered into a binding agreement to sell the airline to Boston-based investment firm Bain Capital. The deal will go within weeks for final approval to a meeting of Virgin creditors who are owed 7 billion Australian dollars ($5 billion).