Gibson Dunn, HSF Kramer land roles as Virgin Atlantic taps Apollo for $745m

Gibson Dunn and HSF Kramer have landed lead roles as Virgin Atlantic secured $745 million in new financing from US private capital giant Apollo, leveraging the airline’s lucrative Heathrow take-off and landing slots as collateral, a structure rarely seen in the UK aviation market.

The financing gives the carrier additional headroom as it moves into a major investment cycle, including refurbishing its Boeing 787-9 fleet and rolling out free Wi-Fi on its planes.

An uncommon structure

Slot-backed financing is used sparingly in aviation. Virgin Atlantic previously relied on a similar structure in 2015, and US airlines such as Delta and American have also used their slot portfolios to secure debt.

The structure contrasts to the more mainstream practice of raising funds against aircraft - or even their loyalty schemes. Heathrow slots, in particular, are among the most valuable aviation assets globally, with the airport running at tight capacity and access highly restricted.

Virgin Atlantic said the financing supports its next phase of fleet modernisation and customer-experience upgrades, including providing Elon Musk’s Starlink Wi-Fi for free across all cabins. The airline has been rebuilding its transatlantic network and sharpening its product offering as demand continues to recover post-pandemic.

Apollo's busy year in the UK

Apollo has been particularly active in the UK this year - and has handed out a string of major mandates to top firms. In June, Kirkland and Latham advised on the firm’s £4.5 billion loan to EDF to finance Hinkley Point C, the largest sterling-denominated private credit deal on record.

In August, an Apollo-led consortium took a stake in UK-based Motor Fuel Group in a transaction valuing the forecourt operator at around £7 billion, with long-time adviser Paul Weiss acting for Apollo.

Advising

Gibson Dunn acted for Apollo, with a core team led by London-based finance partner James Cameron and New York-based real estate partner Eric Feuerstein.

HSF Kramer acted for Virgin Atlantic with structured finance partner Michael Poulton leading the team.