Virgin Atlantic to Cut Jobs as Transatlantic Demand Continues to Dwindle
September 04 2020 - 9:07AM
Dow Jones News
By Adriano Marchese
Virgin Atlantic said Friday that it will cut more than a
thousand jobs across the company as part of a 1.2-billion-pound
($1.59 billion) restructuring package as the airline prepares for
meager transatlantic demand and continued pandemic-related
uncertainty for the rest of 2020.
Transatlantic flights represent around 70% of the airline's
network, which has taken a hit since the pandemic forced many
airlines to ground their fleets in response to global travel
restrictions in March.
Even as restrictions were lifted, quarantine requirements for
travelers arriving in the U.K. from the U.S. have been subject to
two weeks of quarantine, further dampening demand.
The airline said it is calling on the governments of the U.K.
and the U.S. to introduce testing regimes in lieu of travel
restrictions.
"Based on current outlook, the airline is planning to a scenario
in which transatlantic flying from the U.K. does not extend beyond
current skeleton operations until the beginning of 2021," the
company said.
In this scenario, Virgin Atlantic said capacity operated across
its network in the fourth quarter would be around only 25% of 2019
levels, and revenue in 2021 could be half of what it was in
2019.
The airline's restructuring plan is intended to deliver the
refinancing package over the next 18 months, which will complement
self-help measures already taken by the airline.
"Unfortunately, despite actions already taken to reshape and
resize the business, regrettably the airline must go further one
last time with changes at scale, to ensure it emerges from this
crisis," it added.
Virgin Atlantic said it has begun a 45-day consultation period
with unions Unite and Balpa regarding the layoff of 1,150 employees
across all functions.
Additionally, the company said it is introducing a voluntary
company-led and financed furlough scheme for a further 600 crew
when the U.K.'s coronavirus job retention scheme expires in
October.
The company also noted that global institutional alternative
asset management firm, Davidson Kempner Capital Management, is
providing GBP170 million in secured financing, and that it will
receive an additional GBP450 million in deferrals from a number of
its largest creditors and suppliers.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
September 04, 2020 08:52 ET (12:52 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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