Virgin Atlantic takes drastic action to safeguard business

By Damian Brett

Virgin Atlantic has implemented a “drastic” cost cutting exercise as it takes measures to offset a slump in demand as a result of the coronavirus outbreak.

The airline noted a sharp and continual drop in demand for flights across its network, meaning “immediate and decisive action is needed”.

“Today, Virgin Atlantic will put drastic measures in place to ensure cash is preserved, costs are controlled, and the future of the airline is safeguarded,” it said.

“The situation is deteriorating at pace and the airline has seen several days of negative bookings, driven by a huge volume of cancellations as customers choose to stay at home.

“Significantly, the European Commission has announced a suspension of the ‘use it or lose it’ slot rules until 30 June 2020, enabling the airline to consolidate schedules and ground aircraft immediately.”

The following actions will be taken from tomorrow: 

  • Virgin Atlantic will reduce its schedule, prioritising core routes based on customer demand. This change amounts approximately 80% reduction in flights per day by 26 March. As a direct consequence we will be parking approximately 75% of our fleet by 26 March and at points in April will go up to 85%.
  • Owing to restrictions to international travel, the airline is reducing services to focus on core routes, depending on customer demand. This will be subject to constant review as the situation evolves. Our London Heathrow – Newark route will be permanently terminated with immediate effect.
  • As a direct result of this action the airline will need to further reduce its cost base. Staff will be asked to take eight weeks unpaid leave over the next three months, with the cost spread over six months’ salary, to drastically reduce costs without job losses.
  • The airline is grateful to have the support of BALPA and UNITE and the workforces they represent in agreeing to support unpaid leave, alongside other extensive measures.

Then the following further action will be taken:

  • Offering a one-time voluntary severance package to all employees
  • Offering a sabbatical of 6-12 months
  • Deferring annual pay increases until review in January 2021
  • Reducing employer pension contribution for a period of one year
  • Continuing to offer an enhanced company sick pay policy, however, with terms reduced to 12 weeks full pay.
  • Chief executive Shai Weiss has extended his 20% pay cut to the end of 2020, with the executive leadership team agreeing a decrease of 15% for the same period.

The carrier had previously implemented other measures including a recruitment, travel and pay freeze.

The airline has also appealed to the UK government for support: “Our industry needs emergency credit facilities to a value of £5-7.5bn, to bolster confidence and to prevent credit card processors from withholding customer payments.

“We also need slot alleviation for the full summer 2020 season, so we can match supply to demand – reducing costs and preventing unviable flying and corresponding CO2 emissions.

“With this support, airlines including Virgin Atlantic, can weather this storm and emerge in a position to assist the nation’s economic recovery and provide the passenger and cargo connectivity that business and people across the country rely on.”

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