In a landmark move for UK aviation, Virgin Atlantic has secured a massive $745 million (£564 million) loan from alternative investment giant Apollo, using its highly valuable take-off and landing slots at Heathrow Airport as collateral.
A Groundbreaking Deal for Aviation Finance
This pioneering private credit arrangement, one of the largest of its kind in the history of British aviation, will see the airline, founded by Sir Richard Branson in 1984, use the proceeds to pay down existing debt and fund a comprehensive upgrade programme. The investment, worth hundreds of millions of pounds, will be channelled into enhancing its fleet and passenger experience.
Specific plans include installing Starlink wifi across its aircraft and undertaking a full refurbishment of its entire Boeing 787-9 fleet between now and 2028. This refurbishment will feature overhauled interiors with larger first-class and premium economy cabins, directly addressing passenger comfort and competitive positioning.
The Value of Heathrow Slots
In an unusual step that underscores the immense value of airport access at major hubs, Virgin Atlantic secured the loan by offering 27 of its 31 landing slots at the west London airport as security. This is not the first time the airline has leveraged this asset, having pioneered the practice a decade ago.
Airport slots, which grant an airline the right to operate at an airport during a specific time, are incredibly valuable assets, especially at capacity-constrained hubs like Heathrow. With demand for air travel far exceeding available runway space, prime long-haul slots are among the most coveted in global aviation. Their value is demonstrated by historical sales, such as the $75 million Air France reportedly received for a single morning slot from Oman Air in 2016.
Executive Insight and Apollo's UK Ambitions
Virgin Atlantic's Chief Executive, Shai Weiss, hailed the transaction as an "important milestone" in strengthening the carrier's balance sheet. "We're delighted to partner with Apollo on this transaction, and for their confidence in Virgin Atlantic, as we invest in delivering the best experience in the skies for our guests," Weiss stated.
For Apollo, this deal represents its latest significant foray into the UK's private credit market. This follows closely on the heels of two other major British investments: a £4.5 billion commitment to the Hinkley Point C nuclear power station project, which was the largest sterling-denominated private credit deal in history, and an £80 million loan to Nottingham Forest football club.
Ben Eppley, a Partner at Apollo, commented on the deal, saying, "We are pleased to partner with Virgin Atlantic on this transaction, which demonstrates our ability to provide bespoke scaled financing solutions to leading businesses."
