Virgin Atlantic Raises Fresh Cash On Latest Boeing 787-9 DealJanuary 15, 2021
Virgin Atlantic has completed a privately funded, solvent recapitalization transaction which will allow it to raise £1.2bn ($1.62bn) in financing over 18 months. The transaction involves two of the carrier’s Boeing 787-9 which are reportedly going to be sold while immediately leased back to the airline. Financing these transactions are strategic partners Griffin Global Asset Management and Bain Capital Credit.
Initiated on September 4th 2020, the transaction highlights another successful effort by the airline’s management to improve its liquidity in an effort to whither the enduring COVID19 storm. With the recent availability of a vaccine, the airline expects that, along with prior cash-saving measures, enough reserves will be at hand to keep the company operating.
According to most airline fleet database, out of the 17 Boeing 787-9 registered in its fleet, Virgin Atlantic owned only two, with the rest on an operating lease basis. These two aircraft registered as G-VNYL and G-VDIA are the likely airframes involved in the latest sale and lease-back agreement.
To date, in an effort to protecting its liquidity base, Virgin Atlantic has deferred payments to shareholders (£400m) as well as creditors and suppliers (another £450m).
In addition, secured financing in the amount of £170m was obtained from global institutional investment management firm Davidson Kempner Capital Management, as another £200m came in from Virgin Group as investment.
No effective liquidity enhancing plan would have been viable without significant cost savings effort. Virgin Atlantic will save £280m per year speeding up the retirement of the Boeing 747 and Airbus 330 and 340 aircraft from the fleet, as well as £880m in fleet capex in the next five years.