Virgin Atlantic is the latest airline to seek protection from its creditors because of the COVID-19 pandemic. The carrier began the bankruptcy process in New York this week. Here’s what you need to know about the Virgin Atlantic bankruptcy – and what it means for Virgin credit cardholders.
Virgin Atlantic Files for Bankruptcy
Virgin Atlantic filed for Chapter 15 bankruptcy in the southern district court of New York on July 4, 2020. The filing makes Virgin Atlantic the latest carrier to file for bankruptcy protection. Other airlines that recently sought protection due to the economic impact of COVID-19 include LATAM, Avianca, and Aeromexico.
Chapter 15 of the U.S. Bankruptcy Code allows access to U.S. courts for a representative of a corporate bankruptcy proceeding outside the U.S. – in this instance, the United Kingdom.
Despite the foreign majority ownership, Delta Air Lines also holds a minority 49% stake in the carrier. Previously, Delta executives stated that they will not inject cash into the struggling Transatlantic airline, thus necessitating bankruptcy.
What Does This Mean for Virgin Flying Club Members?
The bankruptcy filing is troubling news for Virgin Flying Club members, as well as account holders of the Virgin Atlantic World Elite Mastercard® from Bank of America. Airline bankruptcies often come with a high degree of uncertainty for frequent flier members.
In most recent filings, most notably those of Delta and American Airlines, frequent flyers retained their miles. However, as industry experts point out, in the case of Midway Airlines in 1991, over 700,000 frequent flyers lost all of their loyalty miles.
If Virgin can demonstrate that their Flying Club frequent flyer program is a positive asset, chances are members will retain their miles. The same outcome is also likely if the beleaguered carrier receives a bailout – either from Bank of America or Delta. Again, however, Delta has so far indicated it would not assist Virgin financially.
Related Article: The Ultimate Guide to Delta Air Lines SkyMiles