Virgin Atlantic announced its plans to cut one third – 3,150 – of its 10,000 UK employees following Virgin Atlantic Australia going into administration in mid-April. Chief Executive Shai Weiss said: “To safeguard our future end emerge a sustainably profitable new business, now is the time for further action to reduce our costs, preserve cash and to protect as many jobs as possible.”
Will Virgin Atlantic go into administration?
Although nothing is certain as of yet, Virgin’s co-owner Delta Air Lines inc., which owns a 49 percent stake in the company, raised the possibility of Virgin facing administration proceedings.
Delta said it is unable to invest any more money in Richard Branson’s company as it is facing its own financial issues in light of the coronavirus pandemic.
Delta’s US CEO Ed Bastian told Bloomberg: “With our crisis in cash, we need to protect our own business. That’s where our focus is.
“I trust Virgin will work through its challenges with the Government. If they are required to go through an administration process in the UK, I’m confident they could re-emerge.”
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In addition to reducing its employees, Virgin Atlantic has also announced plans to reduce the size of its fleet of aircraft from 45 to 35 by summer 2020.
They have also halted all operations from Gatwick Airport, with the option to resume flights there in future “in line with demand”.
Mr Weiss said: “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.”
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The airline is in the process of applying for emergency loans from the Government under the financial aid set out by Chancellor Rishi Sunak.
Speaking on the developments, the British Airline Pilots’ Association (BALPA) pointed out the “dire situation facing UK aviation”.
The union said in a statement: “The news of over 3,000 proposed job losses at Virgin Atlantic is devastating for those who work for the airline and BALPA is doing all it can to support members affected.
“There are 426 pilots at risk. This is another terrible blow for the industry and is evidence of the dire situation facing UK aviation.
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“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.”
BALPA 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 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.”
Gatwick was said to be “very saddened” to hear about Virgin Atlantic’s decision.
A Gatwick spokesperson said: “Virgin Atlantic will always be welcomed at Gatwick and we will continue our efforts to explore ways to restart the airline’s operations as soon as possible, in the knowledge that they intend to retain their slot portfolio at Gatwick for when demand returns.”
Commenting on its own future, Gatwick said: “We remain very optimistic about the long-term prospects of Gatwick Airport and our resilience as a business.
“Having remained open throughout this pandemic, we are in a strong position to extend our current operations quickly to meet demand.”
Ryanair has also announced it will cut 3,000 jobs – equating 15 percent of its workforce – with boss Michael O’Leary saying it would be “the minimum that we need just to survive the next 12 months”.
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