UK long-haul airline Virgin Atlantic is on the verge of securing a rescue deal worth £1bn ($1.26bn). The package, which includes a cash injection from Richard Branson, could be confirmed as soon as tomorrow if an agreement over the terms of the collateral request can be met.

Negotiating a bailout

Struggling British airline Virgin Atlantic has been hard at work looking to secure finances to keep its head above water. This weekend, it seems the airline has been negotiating a demand for collateral with a major US-based payments group, related to a rescue deal worth as much as £1bn ($1.26 bn).

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Sky News reports that a subsidiary of FinServ called First Data is seeking to secure an indemnity against Virgin's collapse. This would involve the company holding on to all payments for future bookings with the airline.

These funds, thought to be worth tens of millions of pounds, will not be relinquished by Virgin without a fight, however. CEO Shai Weiss is said to be in talks to moderate this demand to something more acceptable.

Reports suggest that this is the final piece of the puzzle for Virgin's much-needed bailout deal. Other elements of the package have already been agreed.

No government support

Virgin's mission to secure its own bailout package comes without any support from the UK taxpayer. Unlike its competitors, many of which have been bailed out to the tune of billions of dollars, Virgin has had to stand on its own two feet to weather the crisis.

Founder and major shareholder Sir Richard Branson is pumping £200m ($252m) of his own money into the airline as part of the deal. This is part of the cash the entrepreneur raised by selling stakes in the space tourism company, Virgin Galactic.

In addition to Branson's millions, £200m ($252m) more will be pumped in by Wall Street hedge fund Davidson Kempner Capital Management. This will be in the form of loans, adding to the debt burden at the airline.

The rest of the cash-raising will be through fee and payment deferrals. Virgin Atlantic has secured the right to defer £400m ($505m) worth of fees payable to Delta Air Lines and the Virgin Group for three to five years. The airline's leasing companies have also agreed to defer payments worth an additional £200m ($252m).

The good news for fans of the Virgin brand is that none of the process so far has meant Richard Branson will reduce his share of the company. Currently, Branson owns 51% of Virgin Atlantic, while Delta owns the other 49%. This will remain this way for the foreseeable.

Decisions by Tuesday

It is hoped that the rescue deal could be confirmed as soon as tomorrow. The deal is being brokered on the back of a four-year plan drawn up by Weiss, which aims to ensure the carrier's survival, even if it cannot fly to the US before next year.

If it can be secured, it could spell the protection of thousands of jobs. Virgin has already announced it will cut its workforce by almost a third, with 3,150 jobs set to be axed. It has also ended operations at London Gatwick and has been shrinking the size of its fleet.

With travel demand expected to take some time to pick back up, the long-haul focused airline is very much in need of this funding to ensure it can continue to trade.