Virgin Atlantic has confirmed transatlantic flights to the US are not likely to resume until next year and confirmed plans to cut an additional 1,150 jobs.
UK-based long-haul carrier Virgin Atlantic called for a “robust passenger testing regime to open the skies” to the US, noting “transatlantic flying represents 70% of Virgin Atlantic’s network”.
The airline, which is 49% owned by US carrier Delta Air Lines, completed a £1.2 billion recapitalisation through a court-sanctioned process this week following legal hearings in the UK and US.
A 45-day consultation on the new job losses began today. They come on top of a previous round of 3,150 redundancies which cut the workforce by about one third and saw Virgin Atlantic close its base at London Gatwick.
In a statement, Virgin Atlantic said “the devastating impact of Covid-19 on aviation” meant the airline “must take further steps to ensure survival” as it embarks on the Restructuring Plan sanctioned by the courts.
It said: “The US border closure and UK quarantine measures have been in place for far longer than originally anticipated.
“These travel restrictions impact on Virgin Atlantic disproportionally given its long-haul operations focussed on the transatlantic.
“Until travel returns in greater numbers, survival is predicated on reducing costs further and continuing to preserve cash.
“The opening of US borders and removal of quarantine is imperative to recovery. “
Virgin Atlantic confirmed: “Based on current outlook, the airline is planning to a scenario in which transatlantic flying from the UK does not extend beyond current skeleton operations until the beginning of 2021.”
The airline called on the UK and US governments to introduce “robust passenger testing regimes to lift travel restrictions”.
Shai Weiss, Virgin Atlantic chief executive, said completion of the recapitalisation “removes much of the uncertainty we faced. Now we must focus on securing our long-term future.
“It’s clear the introduction of passenger testing is the only way to enable the removal of travel restrictions and open up flying to key markets while protecting public health.
“Further reducing the number of people we employ is heart-breaking but essential for survival. I hope that as demand returns, we will see many members of our team returning.”
In addition to the job losses, Virgin Atlantic announced a company furlough scheme for 600 cabin crew to replace the UK government scheme due to wind up at the end of October.
The carrier’s £1.2 billion recapitalisation comprises £600 million in support from owners Virgin Group and Delta – £200 million in investment by Virgin and £400 million in payment deferrals.
Investment management firm Davidson Kempner Capital Management will provide £170 million in new capital and the airline’s largest creditors and suppliers will contribute £450 million in deferrals.
Unions reiterate calls for sector support
Aviation unions reiterated calls for government support of the aviation sector.
Balpa general secretary Brian Strutton said: “Hardly a day now goes by without more tough news from the aviation industry. This announcement from Virgin is the latest.
“Our reps are meeting with Virgin next week and I am hopeful that we will find a way through to avoid any further pilot redundancies. Every single job lost to this crisis is a tragedy and we are doing everything we can to mitigate job losses across the board.
“Despite no help from government, their financing is now secure. I am confident that Virgin Atlantic will get through this coronavirus crisis and will emerge in a strong position.”
Unite’s assistant general secretary Diana Holland said: “This announcement by Virgin Atlantic is another serious blow to the UK’s aviation industry and is a searing indictment of the cavalier way that the government has treated the aviation sector, which is key to the health of the British economy.
“Virgin Atlantic has done all that could be expected of it by arranging a £1.2bn rescue deal through the private sector, without government help.
“It is high time that chancellor Rishi Sunak and transport secretary Grant Shapps recognised that the UK aviation sector is facing devastating problems with thousands of job losses across many airlines already – and more on the cards.
“The help that the sector needs won’t be short-term as it will take some considerable time for the aviation and holiday sectors to recover as confidence to travel will return slowly.
“We need a tailor-made financial package of measures to tide the industry over the next 12 to 24 months – and Unite stands ready to take part in constructive talks to achieve that goal.
“We desperately want to avoid a second wave of aviation redundancies and the knock-on impact it will have on the wider economy.
“Unfortunately, the government’s aviation policy since the lockdown in March has been one of hand-wringing and confusion, with the ‘on-off’ quarantine measures affecting numerous countries changing almost daily.”