Virgin Atlantic files for bankruptcy as coronavirus crushes airlines

As coronavirus continues to inhibit any kind of international travel, Virgin Atlantic has declared bankruptcy and is seeking protection from its creditors.

The airline, which specializes in long-distance routes and suspended its flights from April until July this year, filed for Chapter 15 in New York court on Tuesday. Chapter 15 allows non-U.S. companies protection from creditors who may want to file lawsuits in America, and a spokesperson for Virgin Atlantic said that the filing was part of a U.K. court process meant to restructure the company through negotiations with its shareholders and creditors.

Delta Airlines, which owns 49% of the company, has agreed to defer payments that it was owed, and the hedge fund Davidson Kempner agreed to loan Virgin Atlantic 170 million pounds. The company said that it hopes to emerge from this process in September.

Though the coronavirus pandemic has had negative consequences for nearly all businesses, it’s possible that no industry is facing a more serious crisis than air travel. According to Virgin Atlantic’s court filings, reservations are down 89% compared to last year, and that demand for the second half of 2020 is just 25% of 2019′s levels.