Virgin Atlantic Pitches Rescue Plan to 12 Potential Saviors

Virgin Atlantic Airways Ltd.’s ability to avoid collapse could come down to about a dozen potential investors who tuned into a video presentation on the airline’s coronavirus survival plan this week.

Chief Executive Officer Shai Weiss pitched the firms in a simultaneous online link-up, according to a person familiar with the matter. He mapped out how the airline would claw its way back to profitability after the travel downturn upended Virgin Atlantic’s turnaround effort, putting it at risk of becoming the second carrier founded by Richard Branson to be felled by the pandemic.

Shai Weiss

Photographer: Chris Ratcliffe/Bloomberg

To get the chance to execute its plan, Virgin Atlantic will need to convince at least one of the suitors to invest. Branson has pledged to chip in, but a greater cash injection will be needed after Britain rebuffed an initial application for 500 million pounds ($610 million) in state-guaranteed loans. The government wants the airline to raise more cash privately before contemplating what could be a politically contentious bailout.

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The next 30 days will be critical as the carrier seeks to put together a package of support, the person said. A restructuring would also include the bulk of $250 million in new funds that Branson, the airline’s majority owner, has said he will contribute to saving his Virgin empire.

Beyond the damage that it’s done to Virgin Atlantic’s business, the virus has added a level of complication to the fund-raising process. The presentation had to be done virtually because of the dangers of spreading the disease.

Weiss pitched to all of the firms simultaneously via a video link and covered areas including Virgin’s revenue generation, its joint venture with minority owner Delta Air Lines Inc., network plans, shareholders and government relations, according to the person, who asked not to be named discussing private talks.

Virtual Pitch

The dozen firms weren’t identified to each other on the video, and questions were handed in separately beforehand.

They included Deutsche Bank AG, which could act as a lender to one of the private-equity firms weighing an investment in Virgin Atlantic, people familiar with the matter said.

Participants also included previously reported names Apollo Global Management, Cerberus Capital Management, Centerbridge Partners, and Greybull Capital, the former owner of Monarch Airlines, which failed in 2017, the people said. The suitors emerged as contenders for investment from 100 originally sounded out by Houlihan Lokey, which is leading the search for new financial backers.

Virgin Atlantic said it couldn’t comment on talks with specific entities.

“We are exploring all available options to obtain additional external funding,” a spokeswoman said. “Discussions with a number of stakeholders continue and are constructive, meanwhile the airline remains in a stable position.”

Deutsche Bank, whose involvement hadn’t been reported previously, declined to comment.

Pre-Pack Option

Virgin Atlantic has said it plans to eliminate 3,150 jobs, or about a third of the workforce, shutter its London Gatwick hub and trim the fleet to 36 planes from 45 to help ride out the pandemic, which has grounded airline fleets worldwide.

The airline has also appointed restructuring specialist Alvarez & Marsal to develop contingency plans for a so-called pre-packaged administration should it fail to secure support. The procedure allows a business with a viable structure but unmanageable amounts of debt to make a fresh start.

Branson, who owns 51% of the airline, has moved to sell shares in his space company Virgin Galactic Holdings Inc. to raise cash for his travel and tourism empire. U.K. government funding remains possible once the carrier has tapped private options, the person said. His Virgin Australia Holdings Ltd. went into administration last month.

Virgin Atlantic has enough cash to survive through the summer, though a decision on state aid over the coming weeks will likely be key, Bloomberg has reported.

Government backing may involve loan guarantees to encourage other investors to put money in, CEO Weiss told the Sunday Times last week. Britain taking an equity stake also can’t be ruled out, he said.

--With assistance from David Hellier.

To contact the reporter on this story:
Christopher Jasper in London at cjasper@bloomberg.net

To contact the editors responsible for this story:
Anthony Palazzo at apalazzo@bloomberg.net

Kenneth Wong

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