Following the announcement by IAG this morning that BA, Iberia and Aer Lingus will – between them – be grounding 75% of their capacity on 1st April, Virgin Atlantic has now announced what it will do.
The statement is below but here is a summary:
Cuts to services to begin tomorrow, Tuesday 17th
By 26th March, 80% of services will be suspended and 75% of aircraft grounded
At some points in April, 85% of aircraft will be grounded
Heathrow to Newark is terminated permanently
All staff to be asked to take 2 months unpaid leave over the next 3 months
All staff to be offered voluntary redundancy
The airline is requesting an emergency £5bn-£7.5bn credit line secured by the Government to be opened up the whole UK airline industry, although IAG is resisting this. This is primarily to give Visa, Mastercard and Amex confidence to release customer payments to the airline.
It is also pressing the European Union to extend its slot waiver for the entire Summer 2020 season, to avoid Virgin having to launch ghost flights from the start of July to retain its Heathrow slots.
Here is an extract from the Virgin Atlantic statement.
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 hasseen 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.