in Aerospace

Virgin Atlantic restructures for post-Covid19 future

Posted 5 May 2020 · Add Comment

In response to the severe impact of the Covid-19 pandemic on the global economy and the travel and aviation industry, Virgin Atlantic today announced plans to reshape and resize its business for the future, including shedding up to 3,150 jobs across its operations and shifting its flying programme from Gatwick to Heathrow.



Courtesy Virgin Atlantic


Uncertainty around when flying will resume, coupled with unprecedented market conditions brought on by the pandemic, which has severely reduced revenues for the global aviation industry and Virgin Atlantic, has led the airline to take decisive action to reduce costs, preserve cash and to protect as many jobs as possible.

It will reduce the number of people it employs, with a planned reduction of 3,150 jobs across all functions and will be working closely with unions pilot's union BALPA and Unite on a company-wide consultation period over the next 45 days.

Shai Weiss, CEO, Virgin Atlantic 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. 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.

“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.”

Virgin Atlantic said it continues to explore all available options to obtain additional external funding. Constructive discussions with several stakeholders, including HM Government, are ongoing, while the Company continues to benefit from shareholder support.
It is taking this action to safeguard the future of the airline so it can emerge from this crisis a sustainably profitable business and will look to make a significant contribution to the UK’s economic recovery by providing essential connectivity and competition.

Virgin Atlantic will fly only wide-body, twin-engine aircraft from London Heathrow and Manchester to the most popular destinations. It will be moving its flying programme from London Gatwick to London Heathrow, with the intention of retaining its slot portfolio at London Gatwick, so it can return in line with customer demand.

From today, Virgin Atlantic will no longer use all of its seven 747-400s, with four A330-200 aircraft retiring in early 2022 as planned. By 2022 the simplified, greener fleet will comprise of 36 twin engine aircraft reducing CO2/RTK emissions by an estimated further 10%, building on the 18% efficiency already achieved between 2007-2019.

Virgin Holidays will become Virgin Atlantic Holidays and continue to focus on its partnership with Next and digital distribution, with 15% of the Virgin Atlantic Holidays retail estate closing in 2020.

A Gatwick spokesperson said: “We are very saddened to hear the news today about Virgin Atlantic’s plans.  We have had a long, close and successful relationship with the airline since it made its maiden flight from Gatwick back in 1984. 

"Virgin Atlantic will always be welcome 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. This news will be devastating for its staff and the many local businesses that supply and support the airline at the airport and its HQ in Crawley, however we will continue to work with Virgin Atlantic to get them flying again from Gatwick.

“The COVID-19 pandemic has had a severe impact on the aviation sector but we remain confident that the industry will recover as air travel demand returns. We remain very optimistic about the long-term prospects of Gatwick Airport and our resilience as a business, and having remained open throughout this pandemic we are in a strong position to extend our current operations quickly to meet demand.  

"We will continue to work closely with our other airline partners, including easyJet, the IAG Group, Wizz, TUI and Ryanair to strengthen our business for the future. We also welcome the recent news that another of our major airline partners – Norwegian Airways – has taken important steps forward to secure its future at Gatwick.

“We look forward to all our airlines flying again soon.”



Virgin Atlantic Cargo
Virgin Atlantic Cargo will continue to provide essential services during this crisis and beyond, keeping global supply chains running and continuing to bring crucial medical supplies and PPE into the UK on a daily basis for NHS frontline teams.

Data analysis
Aviation data analysis expert Cirium provided the following data about the airline:

Virgin Atlantic serves a total of 28 airports, including three UK departure points: Heathrow, Gatwick and Manchester. It markets a total of 422 flights every week, with a total weekly capacity of 133,800 seats (with an 80% load factor that equates to an estimated over 107,000 passengers per week).
   
Virgin Atlantic markets five routes not served by any other carrier, namely Gatwick to/from Havana, Heathrow to/from Barbados (while BA flies out of Gatwick) and Manchester to/from Atlanta, New York JFK and Orlando.

According to February 2020 schedules, the airline markets a total of 19 flights a week on routes not served by any other carrier.

Market share
On the UK-US market, Virgin accounted for 19% of the capacity in February, with 258 weekly flights - second only to British Airways with a 37% share of capacity. On the Manchester - US market, Virgin is the top carrier with 55% of the capacity - followed by American Airlines and United Airlines.

At Heathrow, Virgin is the second biggest carrier after British Airways but Virgin accounts for only 6% of the total capacity at the airport. Virgin holds just 2% of the total capacity at Gatwick.

Operating bases
Virgin serves a total of 28 destinations from its two main bases in London (Heathrow and Gatwick) and its secondary base at Manchester. Out of Heathrow, the airline serves a wide range of US destinations, including Atlanta, Boston, New York JFK and Newark, Las Vegas, Los Angeles, Miami, San Francisco, Seattle and Washington.

From Heathrow it also has operations to Mumbai, Delhi, Hong Kong, Johannesburg, Lagos, Shanghai and Tel Aviv and from Gatwick it has predominantly leisure travel services to Antigua, Barbados, Havana, Montego Bay, Orlando and St Lucia. Virgin also has a significant presence at Manchester Airport, with flights to/from Atlanta, New York JFK and Orlando.

 

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