Virgin Atlantic has emailed customers on Thursday to say their bookings, points, and refunds are safe as the company filed for protection under US bankruptcy law.
The email, signed by Oli Byers, senior vice-president customer loyalty, notifies customers that all scheduled flights are continuing as normal and all upcoming flight and holiday bookings remain valid.
Virgin Atlantic has also reassured members of its Flying Club that they can continue to earn and redeem their miles as usual and that customers with cancellations can continue to make changes or request refunds, which are being processed, according to the company.
The email explains that the company has launched a “court backed process as part of a solvent recapitalisation of the airline and holiday business,” as a “big step forward in securing our future.”
Virgin Atlantic describes the Chapter 15 filing in the US to customers as a “procedural application to allow the US courts to recognise the restructuring process we are undertaking — in this case, the solvent recapitalisation of the airline under English law.”
“The word ‘bankruptcy’ never looks great adjacent to an airline's name,” tweeted leading travel journalist Simon Calder. “Sir Richard Branson's carrier is in poor shape. But the US court filing is to protect the airline's American assets and has no direct implications for staff or passengers.”
Virgin Atlantic said it is “confident” in a £1.2bn ($1.6bn) rescue plan to steady the struggling airline through the coronavirus crisis, despite the Chapter 15 filing.
The company announced a restructuring plan last month to “keep Virgin Atlantic flying,” which would include £400m of deferrals and waivers by shareholders and at least £450m of deferrals by creditors. Past efforts to secure UK government bailout appear to have failed.
The company has said it has the backing of the majority of stakeholders, but secured a UK high court judge’s approval to bring together creditors to meet and vote on the plans on 25 August. The proposals could be made binding on all lenders, whether or not they vote for them.
David Allison, representing Virgin Atlantic, told the court in London on Tuesday (4 August) the group was currently projected to “run out of money altogether” by the first week of October, according to PA.