Virgin Atlantic has filed for bankruptcy protection in the US on Tuesday, being yet another major airline that uses judicial protection in the crisis. The British company founded by billionaire Richard Branson applied for Chapter 15 at the New York Bankruptcy Court.
“The group and its business have been adversely affected by the ongoing COVID-19 pandemic, which has caused an unprecedented near-shutdown of the global passenger aviation industry,” according to the court papers. “Global aviation was one of the first industries to be impacted by the COVID-19 pandemic and is likely to be one of the last to fully recover.”
Virgin Atlantic is a privately held airline company with 51% of the shares belonging to the Virgin group and 49% of Delta Air Lines. Because Virgin Atlantic has business in the US and has American investors, it is authorized to enter Chapter 15, which is a kind of Judicial Recovery for foreign companies.
According to the New York court website, “one of the most important objectives of Chapter 15 is to allow cooperation and communication between American courts and stakeholders with cuts from abroad.”
For now, it is not clear what steps will be taken by Virgin Atlantic, which did not apply for the order in the British courts, where it was founded and is based.
It is worth remembering that the sister airline, Virgin Australia, also filed for bankruptcy and is expected to go on sale soon. Virgin Atlantic had already announced the retirement of the Jumbo Boeing 747 and Airbus A330-200 aircraft, in addition to the layoff of more than 3,000 employees due to the dramatic drop in demand.
Its founder, Richard Branson, was even trying to sell part of the company’s space division to save the airline.