In an effort to survive one of the toughest winters in aviation history, Virgin Atlantic Airways made a deal to sell two of its newest aircraft.
Virgin Atlantic is trying to raise up to £70 million by selling and leasing back its two Boeing 787 Dreamliners, reported Sky News. The deal was made with the aircraft lessor Griffin Global Asset Management, in partnership with the private US investment firm Bain Capital. The proceeds from the sale-and-leaseback could also be used to pay for some of the debt after the airline’s recapitalization completed in September 2020.
“This financing opportunity, regarding two of our 787s, allows us to pay down debt and improve our cash position going into 2021,” said a Virgin Atlantic spokesperson. “Passenger and cargo flying continued throughout November and following our Black Friday sale, we have seen encouraging demand for travel at Christmas, Easter and Summer next year.”
Virgin Atlantic, as an all-widebody airline, has been hit hard by closed borders and international flight restrictions. Around 3000 jobs were cut in the early stages of the pandemic and a further 1,150 jobs were cut in September 2020.
In August 2020, the carrier concluded a rescue deal worth up to £1.2 billion with Richard Branson’s Virgin Group injecting £200 million, as well as £400 million of shareholder deferrals and waivers.
The company hopes that the deal will help to secure Virgin Atlantic’s future for at least 18 months and save 6,500 jobs at the airline. The company aimed to cut as much as £280 million in costs, as it has retired older aircraft, including seven Boeing 747s.
Since the beginning of the pandemic, Virgin Atlantic has been encouraged by the results of its cargo division. In November 2020, Virgin Atlantic Cargo launched a pharma service in preparation to distribute the COVID-19 vaccine throughout its network worldwide.
In a most recent development, Virgin Atlantic Cargo started cargo flights between the UK and Pakistan on December 7, 2020. The flights will be supporting the growing trade volumes between exporters and importers in both countries.
Other struggling airlines have been downsizing to raise money and alleviate the balance sheet crisis. Norwegian Air Shuttle reached an agreement to sell two of its 787-9 Dreamliners to Italian leisure airline Neos Air in October 2020. The British low-cost airline EasyJet also completed the sale and leaseback deals of its nine Airbus aircraft in October 2020.