Virgin Atlantic has announced plans to reshape and resize its business to ensure that it is fit for the future, in response to the severe impact of the Covid-19 pandemic on the global economy, the UK and the travel and aviation industry. Following the pattern of previous crises including 9/11 and the Global Financial Crisis, capacity across the aviation industry will significantly reduce, with recovery to pre-crisis levels expected to take up to three years. Uncertainty around when flying will resume, coupled with unprecedented market conditions brought on by the pandemic, has severely reduced revenues for the global aviation industry and Virgin Atlantic.
Accordingly, the airline has taken decisive action to reduce costs, preserve cash and to protect as many jobs as possible. Virgin Atlantic continues to explore all available options to obtain additional external funding. Constructive discussions with several stakeholders, including the UK Government, are ongoing, while the Company continues to benefit from shareholder support. However, to safeguard the future of the airline so it can emerge from this crisis a sustainably profitable business, further action is required.
The vision is more important than ever, but the path forward must change
To emerge from this crisis, against an uncertain backdrop, the airline must radically adapt, so that it can continue to thrive, while always keeping its people and customers at the heart of everything it does. Once the crisis subsides, Virgin Atlantic will make a significant contribution to the UK’s economic recovery by providing essential connectivity and competition.
Optimising the network and simplifying the fleet
Virgin Atlantic will fly only wide-body, twin-engine aircraft from London Heathrow and Manchester to the most popular destinations. It will be moving its flying programme from London Gatwick to London Heathrow, with the intention of retaining its slot portfolio at London Gatwick, so it can return in line with customer demand.
From today, Virgin Atlantic will no longer use all of its seven Boeing 747-400s, with four Airbus A330-200 aircraft retiring in early 2022 as planned. By 2022 the simplified, greener fleet will comprise of 36 twin-engine aircraft reducing CO2/RTK emissions by an estimated further 10%, building on the 18% efficiency already achieved between 2007-2019.
Virgin Atlantic is the name and the brand
Virgin Holidays will become Virgin Atlantic Holidays, focusing on one powerful brand, while simplifying the brands for customers. Virgin Atlantic Holidays will continue to focus on its partnership with Next and digital distribution, with 15% of the Virgin Atlantic Holidays retail estate closing in 2020. Virgin Atlantic Cargo will continue to provide essential services during this crisis and beyond, keeping global supply chains running and continuing to bring crucial medical supplies and PPE into the UK on a daily basis for NHS frontline teams.
Even in the toughest times, the people of Virgin Atlantic are what sets it apart and decisions taken have been aimed at preserving as many jobs as possible. In order for the airline to emerge from the crisis, regrettably, it must reduce the number of people employed and today the company is announcing a planned reduction of 3,150 jobs across all functions. Working closely with unions BALPA and Unite, a company-wide consultation period of 45 days begins today.
Shai Weiss, CEO, Virgin Atlantic commented: “We have weathered many storms since our first flight 36 years ago, but none has been as devastating as Covid-19 and the associated loss of life and livelihood for so many.
“However, to safeguard our future and emerge a sustainably profitable business, now is the time for further action to reduce our costs, preserve cash and to protect as many jobs as possible. It is crucial that we return to profitability in 2021. This will mean taking steps to reshape and resize Virgin Atlantic in line with demand, while always keeping our people and customers at the heart of all we do.
“I wish it was not the case, but we will have to reduce the number of people we employ. The commitment of our people throughout this crisis has been nothing but amazing, and the embodiment of true Virgin spirit. As we have navigated the Covid-19 crisis, I have been humbled at every step by their solidarity. In times of adversity we must support each other so that ultimately, we can emerge a stronger and better Virgin Atlantic.
“After 9/11 and the Global Financial Crisis, we took similar painful measures but fortunately many members of our team were back flying with us within a couple of years. Depending on how long the pandemic lasts and the period of time our planes are grounded for, hopefully the same will happen this time.
“Our vision for Virgin Atlantic remains the same – to become the most loved travel company, for our people and our customers. Once the crisis stabilises, Virgin Atlantic has an important role to play in contributing to the UK’s economic recovery, providing essential connectivity and competition.”
5 May 2020