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Richard Branson’s Virgin Atlantic Airline Files for Bankruptcy
Upper- advanced
2020/08/05 18:19
Today's Vocabulary
1.bankruptcy (n)
a situation in which a business or a person becomes bankrupt
2.suspended (v)
to stop something from being active, either temporarily or permanently
3. mechanism (n)
a way of doing something that is planned or part of a system
4. bailout (n)
the act of helping a person or organization that is in difficulty , usually by giving or giving or lending money
5. collateral (n)
valuable property owned by someone who wants to borrow money , that they agree will become the property of the company or person who lends money if the debt is not paid back
6. scarce(adj)
not easy to find or get
Richard Branson’s Virgin Atlantic Airline Files for Bankruptcy
Virgin Atlantic is the second Virgin Group airline to file for bankruptcy protection. Virgin Australia filed for voluntary administration — a form of bankruptcy in Australia — in April.
London-based Virgin Atlantic, 49 percent of which is owned by Delta Air Lines, flies exclusively long-haul international routes. It suspended all passenger operations in April when the coronavirus pandemic triggered a crash in travel demand. It began flying passengers again in July.
Chapter 15 is a form of bankruptcy designed for cases involving multiple countries, providing a mechanism for foreign-based companies undergoing bankruptcy proceedings in their own country to access the U.S. court system. It effectively protects Virgin’s U.S. assets from creditors as a U.K. court oversees claims.
Virgin Atlantic announced a £1.2 billion ($1.57 billion) private rescue package in July, but had not finalized the agreement. The airline had previously appealed unsuccessfully for a bailout from the British government. Richard Branson, the Virgin Group founder, has offered his private island as collateral for a bailout or loan.
The airline said during a court hearing in London on Tuesday that it would effectively run out of cash in September, Blomberg reported . Tuesday’s U.S. filing appeared to be linked to the London hearing, at which a judge gave the go-ahead for a meeting allowing creditors to vote on the restructuring plan.
U.S. and European airlines saw a modest recovery in domestic travel demand in May and June, a trend that has since reversed in the U.S. as COVID-19 cases have spiked.
For Virgin Atlantic, which operates long-haul flights through its U.K. hubs, options during the pandemic have been scarce. The airline had planned to build up a domestic network through its acquisition of regional airline Flybe in 2019, but that smaller carrier became the first airline victim of the pandemic , collapsing in early March.
Delta CEO Ed Bastian has said that Delta would not offer a cash injection to save Virgin from a bankruptcy restructuring. U.K. foreign-ownership laws would prevent Delta or any other foreign investor from increasing its stake.
Virgin Atlantic and Delta did not immediately respond to a request for comment.
Resource: https://www.travelandleisure.com/syndication/virgin-atlantic-bankruptcy-coronavirus-pandemic
Discussion
- Aside from airline companies that were bankrupt, what other businesses do you think will continue to be in bankruptcy?
- Cite an example wherein you observed bankruptcy.
“At that darkest moment, while drowning in the Abyss of Emotional Bankruptcy, reflect on this universal truth: the difference between success and failure is one more time.”
