Virgin Atlantic (VS, London Heathrow) is in talks with Deutsche Bank, as well as other institutions, about a capital injection of GBP750 million pounds (USD908 million), The Wall Street Journal (WSJ) reported. The German bank is among a group of around a dozen institutions, mainly private-equity firms, that the troubled carrier is talking to.
News emerged last week that the carrier had started the next round of investor courtship with private equity parties such as Cerberus Capital Management, Apollo Global Management, and Greybull Capital, according to the business newspaper. The GBP750 million being targeted by the airline may also include UK state aid. Discussions between Virgin Atlantic and the UK government are continuing despite its initial bid for GBP500 million (USD615 million) in state aid being rejected by Downing Street. Furthermore, Virgin Atlantic wants to secure the financing through equity and bond issues to the parties that are being discussed.
Also last week, the airline's parent company, Virgin Group, indicated that it wanted to sell a 12% stake in its aerospace company Virgin Galactic (VGX, Las Cruces) to strengthen other parts of the group. The shares being sold, valued at around USD440 million, representing around 20% of Richard Branson's holding in Virgin Galactic.
Despite the strife at his UK airline, Branson is also thought to be waiting in the wings to become part of a consortium looking to acquire Virgin Australia (VA, Brisbane International). New York-headquartered investment fund Cyrus Capital, has close ties to Virgin Australia co-founder Branson, launching Virgin America (San Francisco) together before Alaska Airlines (AS, Seattle Tacoma International) bought it in 2018. Cyrus, Virgin Atlantic and Stobart Group also bought the British regional airline flybe. (2002) (Exeter) in February 2019. Cyrus is thought to have moved through to the second round of bidding for Virgin Australia, along with seven other interested parties.
The airline was contacted for comment by ch-aviation, and a spokesperson replied with the following statement: "Because of significant costs to our business caused by unprecedented market conditions which the COVID-19 crisis has brought with it, we are exploring all available options to obtain additional external funding. Houlihan Lokey has been appointed to assist the process, focusing on private sector funding. Meanwhile, we continue to take decisive action to reduce our costs, preserve cash and protect as many jobs as possible. Discussions with a number of stakeholders continue and are constructive, meanwhile, the airline remains in a stable position. Virgin Atlantic is committed to continuing to provide essential connectivity on competitive terms to consumers and businesses in Britain and beyond, once we emerge from this crisis."
Virgin Group owns 51% of Virgin Atlantic with the balance of shares held by Delta Air Lines (DL, Atlanta Hartsfield Jackson).