Virgin Atlantic is Running Out of Cash, Files for Bankruptcy in US
1 Virgin Atlantic filed for Chapter 15 bankruptcy in New York on Tuesday, after telling a London court earlier in the day that it would run out of money by late September without approval of its rescue package.
Chapter 15 bankruptcy, which is four better than Chapter 11, is designed for foreign companies to access the U.S court system for protection as they work to restructure in their home country. While the rescue package makes it way through the courts, this will protect Virgin Atlantic’s US assets.
Without the funds from the rescue deal, Virgin Atlantic’s available cash will drop to about 49 million pounds by early Fall, below the 75 million pounds required in its bondholder contracts, the airline told a judge Tuesday. A drop in funds that signifiant would require the sale of slots at Heathrow — which the airline used to secure the bonds — causing it to fold its operation. Presumably if this were to happen — which is won’t — Delta would be first in line for the slots, the only part of Virgin Atlantic it cares about anyway.
Virgin Atlantic is confident that its plan will be approved at a hearing scheduled for September 2 — a majority of shareholders have already signed off on the restructuring plan that includes almost £400 million in financing plus £450 million in creditor deferrals and another £400 million in payment deferrals and waivers from both Richard Branson and 49% shareholder Delta.
Virgin Australia to Announce Relaunch Plan
2 On the other side of the failing Virgin airline empire, Virgin Australia and its new owner Bain Capital will be announcing the airline’s plan to relaunch following its trip through the administration process earlier this year. The announcement will be made late Tuesday in the U.S. (Wednesday in Australia).
Labor unions are bracing for the loss of up to half of the airline’s 9,000 employees. Virgin Australia is expected to reduce its fleet from 132 planes to about 70 Boeing 737s focused on profitable domestic routes, if it can find any. It is expected to eliminate its budget TigerAir brand.
The airline has reportedly rejected some of the more extreme suggestions to encourage passengers to return including having kangaroos serve as first officers along with more experienced human captains or accepting payment in vegemite futures instead of cash.
Alitalia Relocates Bulk of Milan Flights from Malpensa to Linate
3 Alitalia has moved nearly all of its Milan flights from Milan/Malpensa (MXP) to Milan/Linate (LIN) as the airline consolidates its operation in Italy’s second-most populous city.
With the move, Alitalia is left with just two daily flights to Rome/Fiumicino and once-weekly service to Cagliari (CAG) from MXP. As always with Alitalia, some of the flights might operate on-time.
Alitalia is the dominant carrier at close-in Linate, operating over 90% of the daily traffic at the airport. While Linate is preferred, Alitalia can’t move its entire operation to the airport. The airline will restore its first two long-haul international routes from Malpensa in the coming weeks, with New York/JFK service resuming on September 2 and Tokyo/Narita on October 3.
All this being said, this is Alitalia we’re talking about here, so expect plans to change at any moment. It might pick up and move everything back to MXP for a week, only to move back to LIN — the sky really is the limit.
EasyJet Posts €324.5 Million Loss
4 British ULCC easyJet posted its Q3 financials (April through June is Q3 for the airline), and it posted a lost of nearly €325 million on a paltry €7 million in revenue.
Amazingly, easyJet operated just 709 flights for the entire quarter, compared to 165,565 the year prior. The airline was able to cut costs by 79%, most of which resulted from the airline shutting down almost its entire operation for the time period.
As the airline looks to rebound financially it plans to fly approximately 40% of its previously planned schedule for Q3 Q4 with the schedule peaking this month and reducing in September.
EasyJet ended June with a strong position in both tea and scone futures, as the airline boasts a supply of scones so large it could serve breakfast to every London resident for five months. Its amount of tea reserves are plentiful enough to give each one of those residents something to wash down that morning scone.
Global Air Capacity Reaches 60 Million
5 The number of seats being offered by the world’s airlines this week will exceed 60 million for the first time since March when the pandemic caused air travel demand to fall off the table.
The 60,042,355 weekly seats scheduled, are just slightly more than half of the 118,998,100 available seats for the same week a year ago — also marking the first time the number has exceeded 50% since March.
Overall, global capacity this week is 4.4% higher than during the previous week and 21% higher than during the first week of July, but the numbers vary widely from across the world.
Despite Europe expanding by nearly 50% since the beginning of July, North America recorded only 7.2% of growth between July 6 and Aug. 3, while fewer than 400,000 departure seats were added in Latin America over the same period.
Airline Potpourri
- Aer Lingus will not resume service to Miami on September 2 as originally planned.
- Air Canada will be launching A220 service between Montréal and Los Angeles in September.
- Alaska is doing its part to unclog the 5 and 101 freeways in Southern California, launching new daily service between San Diego and Santa Barbara.
- China Southern is moving its operations at London/Heathrow to Terminal 5 effective tomorrow, August 5.
- Lufthansa will serve four new destinations from Munich this fall: Marseille (MRS), Gothenburg (GOT), Kiev (KBP) and Sibiu, Romania (SBZ), while resuming flights to Graz, Austria (GRZ).
- Malta MedAir operated its first flight using its own aircraft.
- Porter is delaying its resumption of service to at least October 7.
- Singapore will now be absorbing the 737 fleet of Silk Air in early 2021.
- SpiceJet, the official airline of Victoria Beckham has secured slots to operate at London/Heathrow.
- TAP is resuming flights between Lisbon and Munich with twice-daily service.
Andrew’s Moment of Levity
I sent my hearing aid in for repair nearly a month ago. I’ve heard nothing since.