Virgin Atlantic has entered final talks with its creditors ahead of a crunch High Court vote next week on the £1.2bn rescue package it has secured to keep it flying.

The airline has warned that it could run out of money and enter administration if the creditors do not sign off on the deal that was agreed with shareholders and private investors in July.

Support at the vote, which is scheduled for Tuesday at the High Court, London, would be the final piece in the puzzle of the airline’s complex rescue package.

About 170 of Virgin Atlantic’s top suppliers, ranging from aircraft lessors to media buying agencies, are being asked to accept a 20 per cent reduction on the money the airline owes them, and to receive the rest in staggered payments.

Shai Weiss, chief executive, told the Financial Times in July that he was confident the deal with creditors would go through as it was only launched after the negotiations had been finalised.

The airline “remains confident” that it will be able to win support from the creditors, it said.

Virgin Atlantic’s lawyers told the High Court earlier in August that it would face a critical cash flow situation in September if the bailout funds were not released, and that it would “run out of money altogether” by the final week of the month.

The airline is one of the first UK companies to use a new type of insolvency proceeding that allows the judge to force through the plan regardless of the vote if they see it as in the best interests of the majority of the creditors.

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The new scheme “mitigates the possibility of an otherwise viable plan failing due to a dissenting creditor class”, said Jonathan Dunkley, a managing associate at law firm Womble Bond Dickinson. “We may well see the restructuring plan used again in the space of struggling airlines as the impact of Covid-19 continues to be felt.”

The coronavirus pandemic has thrown the airline industry into turmoil. Virgin Atlantic only restarted flying in late July and has already laid out significant cost savings. These include about 3,500 job cuts, moving operations away from London Gatwick airport and the early retirement of its Boeing 747 jets, which are not fuel efficient. It now runs a fleet of 36 jets, down from 46 at the start of the crisis.

The airline has already secured £200m of cash from Richard Branson’s Virgin Group, which owns 51 per cent of the company, and £170m of debt funding from US hedge fund Davidson Kempner Capital Management as part of the bailout deal unveiled in July.

Virgin Atlantic was forced to look for private funding at the height of the pandemic when the British government refused to offer a bespoke package of state aid. The Financial Times revealed in April that the government had rejected the carrier’s £500m bailout request because it failed to first seek investment elsewhere.

Via Financial Times