Virgin Atlantic files for bankruptcy in New york

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Virgin Atlantic has become billionaire Richard Branson’s second airline to file for bankruptcy this year as the industry continues to be ravaged by the coronavirus pandemic.

The Virgin Group airline filed for Chapter 15 bankruptcy protection in the Southern District of New York on Tuesday, just hours after the company told a London court it will be forced to fold if a rescue deal isn’t reached by next month.   

This marks yet another blow for Branson’s Virgin brand, coming just months after sister airline Virgin Australia filed for voluntary administration in April.

Airlines have been some of the hardest hit by the pandemic as borders shuttered and flights were banned when nations went into lockdown earlier this year.

Virgin Atlantic, which is based in London and 49% owned by Delta Air Lines, was forced to ground all passenger operations back in April.

The airline took its planes to the skies once more in July but, as travel restrictions continue and consumer confidence is low, it has failed to draw the crowds back in.

‘The ongoing COVID-19 pandemic has had an adverse impact on not only [Virgin Atlantic], but the aviation industry as a whole, occasioning the near shutdown of the global passenger aviation industry,’ the company’s lawyers wrote in Tuesday’s filing.

‘While [Virgin Atlantic] has taken various measures to manage its liquidity in light of the unprecedented financial and operating conditions it faces, a more comprehensive recapitalization is necessary to secure the future of its business and ensure that it is able to meet its liabilities and funding requirements beyond mid-September 2020.’

Chapter 15 is a form of bankruptcy for companies that span multiple countries, providing a way for foreign businesses to file for bankruptcy in the US court system.

The filing means the airline is not yet going into liquidation or going out of business.

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