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Further Job Cuts for Virgin Atlantic but Hope for Next 18 Months
Posted on 7th September 2020Airline, Virgin Atlantic has successfully secured a rescue plan worth £1.2bn that will see its future safe for at least the next 18 months. However, the plan does come at a cost, as it is expected 1,150 additional jobs will be lost.
3,500 jobs have already been cut but the airline claimed cutting costs is essential to its survival. A spokesperson said: “Until travel returns to greater numbers, survival is predicted on reducing costs further and continuing to preserve cash. The outlook for transatlantic flying, which is core to Virgin Atlantic’s business remains uncertain with US-UK travel curtailed.”
Admitting that the past six months had been the “most challenging” time in its history due to the Coronavirus pandemic, the airline stated one last push was required for cutting costs to ensure that it survives the crisis. A 45-day consultation period is set to begin this Friday with the relevant unions.
A voluntary company financed furlough scheme will be introduced in October when the government scheme ends for 600 crew members, in an attempt to reduce the number of redundancies.
Balpa, the pilots union, claimed that it hoped pilot redundancies would be avoided: “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.”
Though the aviation industry as a whole has suffered immensely as a result of the pandemic, Virgin Atlantic has taken a harder hit than other airlines for the simple reason it relies on transatlantic traffic, and restrictions in this area remain securely in place. Though it’s hopeful it can ‘ride out the storm’ and secure its future, to do this, it will need to transition into a significantly smaller airline than it was at the beginning of the year.
Delta Air Lines, the US airline who owns 49% of Virgin Atlantic, said: “[The rescue plan] was an important part of protecting Delta’s position in the Uk, particularly in the critical London Heathrow market.”
The £1.2bn rescue plan, which won approval from both UK and US courts just last week, contains £400m in ‘new cash’ half of which is from Sir Richard Branson’s Virgin Group, the main shareholder of the airline.
Chief Executive of Virgin Atlantic, Shai Weiss said: “Together, we have achieved what many thought impossible and that is down to the efforts and sacrifices of so many across the company.”
Mr Weiss also called for “urgent government action” to be taken for airport testing as this would in turn allow travel restrictions to be removed.
Only time will tell if Virgin Atlantic has a secure long-term future, but at present, the airline remains hopeful for the coming year and a half.
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