Virgin Atlantic is set to announce a £1 billion rescue deal from Atlanta-based financial services firm First Data, in a last-ditch attempt to avoid collapse without relying on taxpayers’ money.
The airline, launched in 1984 by British business tycoon Richard Branson, has struggled to stay afloat during the coronavirus pandemic due to almost universal travel restrictions which grounded its planes and drove the wider travel industry into paralysis.
First Data is a subsidiary of NASDAQ resident Fiserv (NASDAQ:FISV). The financial services provider has allegedly made “stringent” demands in return for its support for the struggling airliner.
Sources told Sky News on Sunday that the firm has requested to hold onto all future bookings revenue in a bid to “protect itself” if Virgin should indeed collapse. Virgin Atlantic Chief Executive Shai Weiss is reportedly trying to “moderate” First Data’s demands.
Lloyd Bank’s Cardnet has already “broadly agreed” to the terms put forward in the proposal.
The deal would pave the way for a £200 million cash injection from Atlantic’s parent company Virgin Group, as well as an additional £400 million in fee deferrals and waivers from Virgin Group and Delta Air Lines (NYSE:DAL) – which owns 49% of the company.
If the deal goes through, thousands of British jobs could be saved. Virgin announced back in May that as much as a third of its 10,000 UK employees could expect to lose their jobs over the next few months.
A number of other airline giants have been forced to make mass redundancies, including United Airlines (NASDAQ:UAL), who is set to lay off almost half of its global workforce.
Global airlines are projected to suffer an $84 billion loss due to the pandemic over the course of 2020.
