Richard Branson’s Virgin Atlantic Airline files for bankruptcy in New York

Richard Branson’s Virgin Atlantic airline has filed for Chapter 15 bankruptcy in New York on Tuesday.

Virgin Atlantic is the second Virgin Group airline to file for bankruptcy protection as pandemic rips apart the industry.

Earlier in April, Virgin Australia filed for voluntary administration, a form of bankruptcy in Australia.

The London-based Virgin Atlantic is 49% owned by Delta Air Lines, flies exclusively long-haul international routes.

The airline during a London court hearing on Tuesday said that it would effectively run out of cash in September, according to Bloomberg’s report.

And later Tuesday’s US filing appeared to be linked to the London hearing, at which a judge gave the go-ahead for a meeting allowing creditors to vote on the restructuring plan.

The airline suspended all passenger operations in April as the coronavirus pandemic triggered a crash in travel demand. However, the airline resumed flying passengers again in July.

In May, Virgin Atlantic announced that it would cut more than 3,000 jobs and close its base at London’s Gatwick airport, consolidating operations at London Heathrow to cut costs.

The airline has also retired its iconic Boeing 747-400 fleet as a cost-saving measure.

Chapter 15 is a kind of bankruptcy that is designed for cases that involve multiple countries, aiming at providing a mechanism for foreign-based companies undergoing bankruptcy proceedings in their own country to access the US court system.

The filed bankruptcy claim will effectively protect Virgin’s US assets from creditors as a UK court oversees claims.