Virgin Atlantic Files for Bankruptcy in the US

Richard Branson’s Virgin Atlantic airline filed for bankruptcy in New York on August 4, 2020. It is the second Virgin Group airline to file for bankruptcy protection. Virgin Australia suffered a similar fate in April.

Delta Air Lines also owns a 49 percent stake in the London-based airline, which flies long-haul flights between several international destinations but Delta CEO Ed Bastian says Delta will not provide a cash injection to assist Virgin.

The airline grounded all flights in April during the beginning of the coronavirus pandemic and began flying again in July, even though there was very low demand for flights.

The airline has filed for Chapter 15 bankruptcy, which is reserved for multinational cases. The filing shields Virgin Atlantic from creditors while it works to finalize a rescue plan.

Previously, Virgin Atlantic appealed to the British government for a bailout but was unsuccessful. The airline has not yet entered administration in the United Kingdom, which is that country’s form of bankruptcy.

Virgin may be scrambling for a rescue plan, but the future may not be so bleak for the airline—at least for future passengers—said Sam Kemmis, travel industry analyst at NerdWallet.

“Generally, airline bankruptcies aren’t as scary as they sound,” Kemmis noted. “We don’t know many details about the Virgin Atlantic bankruptcy, but passengers who have upcoming tickets on Virgin Atlantic or are holding a cache of Flying Club miles shouldn’t worry just yet—operations are likely to continue in the short term. In the unlikely event that the airline does cease operations without issuing refunds, customers may be able to contest the charge with the booking credit card, or issue a claim with travel insurance, if applicable.”

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