Watson Farley & Williams (“WFW”) has advised the investors, Macquarie Corporate and Asset Finance as arranger, SFM Trustees Limited as security and bond trustee and Elavon Financial Limited as cash manager on the launch of an innovative, first-in-kind, capital markets transaction for Virgin Atlantic.

The transaction allows Virgin Atlantic to raise capital through a private placement of bonds secured by a portfolio of Virgin’s arrival and departure slots at London Heathrow Airport. This is the first time that airport slots have been used in this particular way in Europe.

A special purpose vehicle was established to issue senior secured bonds in the amount of £220 million, rated by Moodys and offered to institutional investors. The proceeds of the bonds are expected to be used by Virgin Atlantic to fund long term investment including the acquisition of new aircraft.

Lead partner and WFW Global Head of Transport, Rex Rosales, said: “This deal emphasises the growing importance and sophistication of capital markets transactions within the aviation industry. It heralds the arrival of a new source of funding in this sector and the use of a previously untapped asset class as collateral for aviation financing. The deal has already attracted mainstream press coverage, demonstrating the innovation involved in this truly landmark capital markets transaction and its likely appeal to other airlines. We have been developing this structure for some time and expect to see others seeking to raise capital in this way.”

Peter Farthing, Division Director at Macquarie said: “It was a pleasure to work with Rex and the WFW team on what has been a very challenging and innovative transaction. It was very much a collaborative effort from all participants, as legal, structural, regulatory, tax and accounting issues needed to be considered and resolved. We are proud to have arranged this financing for Virgin, which constitutes a new milestone in aviation finance and emphasises the importance of London Heathrow Airport as one of the world’s premier transport hubs.”

The WFW team included partner Jahnavi Ramachandran, associates Caroline Joyce, Charlotte Bown and Tim Hunter-Jones, and trainee solicitor Edward Moore from the Aviation Finance group; tax partner Richard Stephens and associate Rob Firth; partner Rob McBride from the debt capital markets and structured finance team who advised on bond aspects and experienced capital markets and structured finance partner, Siân Withey, assisted by associate, Sarah Lunn, who advised SFM and Elavon.

Siân commented: “It is great to be part of the continuing evolution of capital markets in the transport sector.”

Virgin Atlantic was advised by law firm Herbert Smith Freehills LLP.