Virgin Atlantic has filed for bankruptcy protection in the United States.
The filing under chapter 15 of the US bankruptcy code allows a foreign debtor to shield assets in the country.
The airline is emphasising that the filing is not under chapter 11 and is not a bankruptcy filing. Rather it is “a filing which supports the solvent recapitalisation of the airline”.
It says that there is no affect on bookings made with it, though it will increase travellers doubts about the airline after sister airline Virgin Australia, went into administration in April.
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The court filing in the U.S follows yesterday’s moved in the High Court in the U.K where the airline said, according to reports on Bloomberg, that it will “run out of cash next month unless it secures approval for a 1.2 billion-pound ($1.6 billion) rescue package announced in July”.
The rescue package is essential, since without it “available cash will drop to about 49 million pounds by late September, below the 75 million pounds specified in bondholder contracts”
In that event, the airline would then have to sell its Heathrow slots against which the bonds are secured, “forcing the carrier to fold”.
