Virgin Atlantic's £1.2bn rescue gets court approval

Virgin Atlantic's £1.2bn rescue deal is due to complete on 4 September after a judge approved the airline's restructuring plan.

Judge Richard Snowden authorised the plan at a remote hearing at London's high court, Reuters reported.

"This will allow you to make this plan effective by Friday which I understand is your aspiration," Snowden said. A procedural court hearing will take place on Thursday but Snowden said the court order did not depend on the US process.

The airline, 51% owned by Richard Branson's Virgin Group, had warned it would run out of cash in September if the deal failed. Trade creditors voted for the arrangement in August, paving the way for the rescue to succeed.

"Achieving this significant milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies, safely, as soon as they are ready to travel," a spokesperson told Reuters.

After the UK government refused to bail out the airline Virgin Atlantic asked private investors to draw up a recapitalisation to help it through the next 18 months as the industry faces its greatest crisis. Trade creditors owed more than £50,000 each will get 80% of what they are owed in instalments.

US hedge fund Davidson Kempner Capital Management will pump in between £170m in fresh cash, with founder Richard Branson putting in £200m of his own money, raised through selling off a stake in the space division Virgin Galactic.

There will also be £450m in debt relief from Virgin Group and Delta Air Lines, which owns 49% of the airline. Jet-leasing firms will ease payment terms and the airline is cutting more than 3,000 jobs, or a third of its workforce.