Virgin Atlantic unveils ‘drastic’ measures to conserve cash
Jennifer MorrisVirgin Atlantic has announced a series of “drastic” measures in the face of the coronavirus crisis, including an 80% reduction in flights and asking staff to take eight weeks’ unpaid leave.
The airline said last week’s developments had “accelerated the sharp and continual drop” in demand for flights across its network.
“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,” it said.
“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.”
Immediate action from 17 March
▪ Virgin Atlantic will reduce its schedule, prioritising core routes based on customer demand. This change amounts to approximately an 80% reduction in flights per day by 26 March. As a direct consequence it will be parking approximately 75% of its fleet by 26 March and at points in April will go up to 85%.
▪ Owing to restrictions to 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. Its Heathrow-Newark route has been permanently terminated.
▪ Staff will be 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 said it has the support of the Balpa and Unite unions and the workforces they represent in agreeing to support unpaid leave, alongside other extensive measures.
Other new steps
▪ 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.
▪ Chief executive 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.
Government call
Elsewhere, Virgin Atlantic has appealed to the government for “clear, decisive and unwavering support” for the UK aviation sector.
A Virgin Atlantic spokesperson said: “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.”
Jennifer Morris
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