Virgin Atlantic creditors back GBP1.2b rescue package

Virgin Atlantic's creditors overwhelmingly backed a GBP1.2b rescue package for the cash-strapped airline on Tuesday in a vote that opens the door to a full recapitalisation early next month. A group of about 170 of companies voted to accept a 20 per cent “haircut” on debts owed as part of a High Court restructuring process, and to receive the outstanding balance in a staggered set of payments.  The airline had warned that it risked running out of money by late September without the rescue deal, which was agreed in July and includes a cash injection from Richard Branson's Virgin Group. “Virgin Atlantic has reached a significant milestone in safeguarding its future,” the company said. Ninety-nine per cent of the airline’s trade creditors backed the proposal, which also received the full support of shareholders, aircraft lessors and creditors under the company’s revolving credit facility. Virgin Atlantic now expects the package of support to be rubber-stamped in the UK and US courts before a full recapitalisation next week. The deal includes GBP400m of fee deferrals from shareholders, Virgin Group and Delta, which owns 49%. Creditors have also agreed to postpone payments worth a further GBP450m. Additionally, Virgin Atlantic has committed to a range of cost-cutting measures, including job cuts, the closure of operations at London Gatwick airport and the downsizing of its fleet.<br/>