Given the severity of the coronavirus pandemic Virgin Atlantic says it will reduce its schedule by 80 per cent by 26 March, prioritising core routes based on customer demand.
The ongoing closure of borders by various countries as the COVID-19 pandemic spirals across the globe has accelerated the sharp and continual drop in demand for flights across the globe. This includes Virgin Atlantic’s network, with the carrier saying “immediate and decisive action is needed.
“The safety and wellbeing of our people and our customers is always our number one priority. 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.
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.”
As a direct consequence the carrier will be parking approximately 75 per cent of its fleet by 26 March and at points in April will increase it to 85 per cent, it says.
Owing to restrictions on 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, the carrier says. Its London Heathrow – Newark route will be permanently terminated with immediate effect.
As a direct result of this action the airline says it will need to further reduce its cost base with staff 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 says it 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.
Further cost reductions measures include:
- 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;
- CEO 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.
These measures go above and beyond those already announced on 4 March 2020, which include:
- A company-wide recruitment freeze;
- A restriction on all non-essential staff travel and training (all safety and compliance training remains in place);
- A proposed deferral of annual pay increases from March until August 2020, when affordability will be reassessed, based on the impact of Covid-19 at that point.
Virgin Atlantic has also appealed to the UK Government for “clear, decisive and unwavering support for the UK aviation sector,” comprising:
- Emergency credit facilities to a value of EUR 5.5 – 8.3 billion, to bolster confidence in the industry, and to prevent credit card processors from withholding customer payments;
- Slot alleviation for the full summer 2020 season, enabling airlines to match supply to demand – reducing costs and preventing unnecessary flying and corresponding CO2 emissions.
A Virgin Atlantic spokesperson says: “The aviation industry is facing unprecedented pressure. We are appealing to the Government for clear, decisive and unwavering support. Our industry needs emergency credit facilities to a value of £5-7.5 billion, 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.”
“The Covid-19 situation is dynamic and fast-moving, and Virgin Atlantic continues to monitor it very closely, with the health and safety of customers and people remaining the absolute priority,” it says. The carrier adds that all actions taken are guided by the World Health Organisation (WHO), Public Health England and the Foreign and Commonwealth Office (FCO) and by the latest advice provided by these experts.