FLIGHTS between Nigeria and the UK could be affected by the absence of one of the major airlines plying the busy London-to-Lagos route after one of the operators Virgin Atlantic filed for bankruptcy as a result of losses incurred due to the coronavirus lockdown.
One of the most active airlines plying the highly London to Lagos route, Virgin Atlantic had planned to resume flights to Nigeria on August 24. All it was waiting for was for the Nigerian government to open its international airports and airspace following the coronavirus lockdown.
However, this resumption is looking in doubt now after Virgin Atlantic filed for bankruptcy and is seeking protection from creditors in the US. Virgin Atlantic, founded by billionaire Sir Richard Branson, has told a court that it could run out of money by the end of September if creditors do not approve a £1.2bn bailout package.
In May, Virgin Atlantic announced it was closing its Gatwick operation and axing 3,150 jobs, representing around a third of its workforce. Before taking such action, the company had told staff to take eight weeks of unpaid leave and called on the UK government to offer emergency credit facilities worth up to £7.5bn.
Although further redundancies cannot be ruled out, the latest bankruptcy filing has no direct impact on more job cuts and the airline says it is confident it will continue running flights. At a High Court hearing in London yesterday, a lawyer representing Virgin Atlantic told the judge the company was undergoing a liquidity crisis as a result of the coronavirus pandemic.
In written a submission to the court, legal representative David Allison, said: “The group’s financial position has been severely affected by the ongoing Covid-19 pandemic, which has caused unprecedented disruption to the global aviation industry. Passenger demand has plummeted to a level that would, until recently, have been unthinkable.
“As a result of the Covid-19 pandemic, the group is now undergoing a liquidity crisis. Without a restructuring and an injection of new money, it is projected that the group’s cash flow would drop to a critical level by the week commencing September 21, 2020.
“It is projected that the group would run out of money altogether during the week commencing September 28, 2020.”
In America, Virgin Atlantic filed for protection in a US federal bankruptcy court in New York. The company is seeking protection under chapter 15 of the US bankruptcy code, which allows a foreign debtor to shield assets in the country.
Virgin Australia went into administration in April and its new owner Bain Capital, is expected to cut about 3,000 jobs. Virgin Atlantic has previously said it does not expect demand for air travel to return to pre-coronavirus levels until 2023.
A Virgin Atlantic spokesperson added: “With support already secured from the majority of stakeholders, it is expected that the restructuring plan and recapitalisation will come into effect in September. We remain confident in the plan.”