By Kate Holton
LONDON -Virgin Atlantic has raised 400 million pounds ($530 million) in fresh funding from shareholders Virgin Group and Delta Air Lines as a new bout of gloom descends on the aviation sector.
Founded by Richard Branson in 1984, Virgin Atlantic has been particularly hard hit during the COVID-19 crisis after business travel and long-haul flights largely ground to a halt.
The new funds announced on Monday will help the airline to bolster its balance sheet, cut debt, improve liquidity and withstand any new downturn in flying, it said.
"Virgin Atlantic's business has transformed, allowing them to emerge from the pandemic a stronger airline," said Josh Bayliss, CEO of Branson's Virgin Group.
The agreement for new funding adds to 1.5 billion pounds of recapitalisation completed over the past two years. The split for the fresh funds is 204 million pounds from Virgin Group and the rest from Delta.
The ownership structure remains unchanged, with Virgin Group owning 51%.
Virgin Atlantic, which flies to the United States, the Caribbean and destinations in Asia, said the full support of shareholders and creditors means it is now ready to recover after the reopening of U.S. borders to European nationals and as it benefits from pent up demand for next year.
Airlines such as Virgin and British Airways were given a huge boost in early November when the United States reopened its borders to allow normal transatlantic routes to resume.
Some of that optimism has since dimmed, however, as emergence of the Omicron coronavirus variant has forced the reintroduction of some travel restrictions. Shares in British Airways owner IAG are down 16% in a little more than two weeks.
Major British airlines on Monday also called on the government to remove testing rules for vaccinated passengers and provide economic support for the battered sector.
($1 = 0.7547 pounds)