Virgin Atlantic has announced plans to cut more than 3,000 roles, temporarily cease operations at Gatwick and rebrand Virgin Holidays as Virgin Atlantic Holidays as part of a major restructure to help the business survive the coronavirus crisis and "radically adapt" to new challenging new market conditions.
Staff and union leaders were briefed on the proposals Tuesday lunchtime (5 May) following an update from Virgin Atlantic chief executive Shai Weiss, who said the carrier was still exploring all available options to secure additional funding from existing shareholders, as well as the government.
"To emerge from this crisis, against an uncertain backdrop, the airline must radically adapt," said Virgin.
"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.
"The airline has taken decisive action to reduce costs, preserve cash and protect as many jobs as possible. However, to safeguard the future of the airline so it can emerge from this crisis a sustainably profitable business, further action is required."
Virgin is understood to have been one of the first major firms to approach the government for financial support, but its application was knocked back. EasyJet, meanwhile, has agreed a £600 million commercial loan from the government’s Covid Corporate Financing Facility.
In total, Virgin plans to reduce its workforce by 3,150 roles "across all functions"; a company-wide 45-day consultation on its proposals got under way on Tuesday, in collaboration with pilots union Balpa and the Unite union.
Virgin will simplify its fleet to comprise just wide-body, twin-engine aircraft flying from Heathrow and Gatwick to its "most popular destinations". Its Gatwick flying programme, meanwhile, will relocate to Heathrow, although Virgin has signalled its intention to retain its slot portfolio at Gatwick and return to the Sussex airport "in line with customer demand".
It will retire four A330-200 aircraft in early 2022 as planned, and stop using all of its B747-400 aircraft with immediate effect. By 2022, Virgin’s "simplifier, greener" fleet will comprise 36 twin-engine aircraft, which it says will reduce emissions by around a further 10%.
Elsewhere, Virgin Holidays will be rebranded Virgin Atlantic Holidays, and will continue to focus on its Next store partnership and digital distribution platforms; 15% of the Virgin Atlantic Holidays retail network will shut this year.
Virgin Atlantic Cargo will continue to support global supply chains, and ship vital medical supplies and PPE to the UK for frontline NHS use.
"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," said Weiss.
"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 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."
Weiss continued: "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."
Balpa has pledged its support for members working for Virgin, whom the union said would likely be "devastated" by the news, and urged government to step in to support the UK aviation sector.
"There are 426 pilots at risk," said Balpa. "This is another terrible blow for the industry and is evidence of the dire situation facing UK aviation.
"Without immediate action by the government, we will see the once world leading industry decimated and that will have an effect throughout the UK economy and to all the other industries that rely on aviation.
"Virgin applied for government support weeks ago, and Treasury is still prevaricating. It won’t just be airline staff who are hit by this lack of support, it will reverberate right through to the whole UK."
General secretary Brian Strutton added: "Our members and all staff in Virgin Atlantic will be shocked by the scale of this bombshell. We will be challenging Virgin very hard to justify this.
"My letter to the chancellor yesterday [Monday] is all the more significant – why is the government sitting on its hands while aviation plunges further towards a death spiral?
"Government should call a moratorium on job losses in aviation and lead a planned recovery."