Last week saw a rapid acceleration of the impact of Covid-19 on global aviation and tourism. The World Health Organisation declared the outbreak a global pandemic on Wednesday 11 March, as cases continue to rise. An increasing number of countries are now closing their borders – most significantly, the US, where a travel embargo from the UK comes into force on Tuesday 17 March.
Though this was expected, it has accelerated the sharp and continual drop in demand for flights across Virgin Atlantic’s network, meaning 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.
Given the unprecedented circumstances and the severity of the outlook, the following immediate action will be taken:
From Tuesday 17 March 2020
- Virgin Atlantic will reduce its schedule, prioritising core routes based on customer demand. This change amounts approximately 80% reduction in flights per day by 26 March. As a direct consequence we will be parking approximately 75% of our 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. Our London Heathrow – Newark route will be permanently terminated with immediate effect.
- As a direct result of this action the airline will need to further reduce its cost base. 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 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.
The following steps to further reduce costs 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.
Today’s measures go above and beyond those already announced on 4 March 2020:
- 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.
Furthermore, Virgin Atlantic has appealed to the Government for clear, decisive and unwavering support for the UK aviation sector, comprising:
- Emergency credit facilities to a value of £5-7.5bn, 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 commented: “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 £5-7.5bn, 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.”