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Virgin Atlantic to ground up to 85% of its aircraft and cancel 80% of its flights

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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.

Virgin Atlantic to ground up to 85% of its aircraft

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.

Comments (73)

  • Phil G says:

    So the staff are asked to take 8 weeks unpaid leave deducted over a 6 month period, and hence a 30% pay cut for that period (although obviously with extra time off), whilst the leaderhip team are helping by reducing there somewhat larger salaries by 15%, god bless the board

    • Rich says:

      Precisely what stood out to me!

      They should be taking zero salary or benefits for a year if they’re serious about saving the airline.

    • Peter K says:

      But looking over 52 weeks, staff get a 8/52= 15.4% reduction in wages but 8 weeks extra time off to do things (eg decorate their house).

      The board get ((41/52 x 0.85) + (11/52 x1.0)) /52 = 88.2 % yearly salary, so 11.8% yearly reduction in wages but get no extra time off.

      • Rich says:

        They are proposing to spread the 2 month salary reduction over 6 months. 33% less in your paycheck till Autumn

        But the wider point, whether it’s 10% or 30%, is that for the people at the top, it means shuffling around some investments and choosing a cheaper wallpaper for the villa in Tuscany.

        For a lot of the staff it means worrying about the mortgage.

        I just think it’s beyond absurd to be asking so much of the taxpayer and your employees, whilst offering so little.

        • Peter K says:

          I’m not saying it’s fair or reasonable, just pointing out that the board’s pay cut is for longer. No doubt they won’t get bonuses either which also impacts on them.

          Your other point though is valid. Most of us have potential money concerns going forward.

          • Andy says:

            The thing is…the board members will already be wealthy. None of them are poor. They could afford to work for nothing over this period.

          • Turnip says:

            @Andy, how do you know the financial position of each member of the Board? How do you know what people can and can’t afford? Just because you sit on the Board of a company, doesn’t mean you are rolling in cash and can afford not to be paid. You sound like a complete bell end.

          • Max says:

            I agree the board should take a bigger pay cut, rather than their employees. They’re going to be asking the UK government to bail them out, this should be a condition of that.

        • Andreas says:

          @Phil G and @Rich, thanks for your input. Usual moaning about people making a good gesture but you’ve offered absolutely nothing by way of an alternative. Thanks for that, hope to see no more verbal diarrhoea from you pair again.

    • Lady London says:

      Oh, do not worry, in these situations management generally makes sure everyone knows they took a cut too. The clever ones announce their cut – as in one case reported here recently – then you can be sure a request to the employees to “voluntarily” sacrifice will follow.

      Trouble is, salary is mostly a very small part of these executivfes’ pay packages. Particularly if they have been put there by Private Equity (sorry, Rob). It’s absolutely tiny. And even if bonus or one of the myriad component parts of these executives’ remunderation is announced to be reduced or cut temporarily, you can be very sure it still comes back to them later provided the company is still standing.

      Been very , very close to some of these. (unfortunately was not the personal partaker).

      • Anuj says:

        She made some very good points. Why should the staff shoulder a disproportionate amount of suffering?
        And in regards to “Too much chat coming from you” – what a childish and borderline sexist thing to say

  • PaulC says:

    My dad has just messaged me to say there are 2 Virgin A340’s parked up at Prestwich this morning along with a few other extra’s. A critical time for all businesses.

    • Oh! Matron! says:

      Not aware Manchester had a new airport. Prestwick, surely? 🙂

      • Charlieface says:

        I’d love an airport at Prestwich so long as the flight path didn’t go directly over my house 🙂

  • Lee says:

    Are we likely to see airlines like BA, Singapore (silkair)
    Etc do more retro fits and get there new cabins out there quicker with all these planes not flying ?

    • marcw says:

      They’ll get rid of them. BA is likely to accelerate 747 retirement.

      • ChrisC says:

        KLM is retiring its remaining 747s by the end of the month instead the end of next year.

        AF is grounding its A380’s

        Lots of fleet rationalisations going on.

      • Mark says:

        Perhaps, although some of the 747s are expect to remain in service for another 4 years, and that assumes that the 777-9 is certified according to Boeing’s planned timeline / starts delivery to BA in 2022.

        So yes those due to go over the next few months at least (assuming IAG still sticking to the plan not to defer new deliveries), but for those due to be retired next year and beyond that will very much depend on how things to pick up again and to what extent the effects are elongated by the resulting economic damage and subsequent recovery (and whether the cessation of flights drives any kind of long-term behavioural changes with regard to business travel). It’s very difficult to judge at this stage, so temporary storage would be the more pragmatic option in the first instance.

    • Heathrow Flyer says:

      Paid for on the never-never?

    • ChrisC says:

      The issue with fitting the new suite is the limitation on how many the manufacturer can make which I belive is 3 per day. And that assumes that their supply chain hasn’t been disrupted.

      It would be nice to think that airlines could use the time to fix all maintenance problems and give planes a good deep clean but that costs money and they are trying not to spend unless they have too

  • berneslai says:

    Hmm..maybe I’ll convert my Virgin miles into Hilton points.

    • Heathrow Flyer says:

      Good luck getting through.

      But yes, I had the same thought.

    • Rich says:

      The thought did occur to me. I have a few Virgin miles, and I’m massively exposed in Avios.

      Rob – I’d be interested in your take on the risk to FF balances.

      • MattB says:

        Read a post in FT from a guy with almost £20k in BA “vouchers” and a few million avios!! A fair bit of personal exposure.

    • ee says:

      Was also thinking this yesterday…

      Can the staff say ‘no’ to 2 months unpaid leave?

    • Simon says:

      I thought about doing that also but as Heathrow Flyer it will be almost impossible to get through on the phone. I did a miles booster for flight in November which I’d like to cancel (still in the 14 day cooling off period) but again can’t see I’d be able to get through on the phone.

    • TGLoyalty says:

      Virgin will survive and booking will be down. I wouldn’t get rid of them all just yet.

      Virgin Red also owns all the miles so surely the option to spend on Delta or transfer to Hilton will still exist.

      • Rob says:

        Only if VR has enough money to pay Hilton etc – and I doubt it does.

      • HAM76 says:

        We have been through this with airberlin and topbonus no long ago….

        • TGLoyalty says:

          That is true.

          Something tells me that Virgin is in a better place then them and being owned by Delta rather than Etihad will help.

          They may rethink their reliance on US flights though.

    • Mark says:

      Yes, I had the same thought too, then discounted it when I saw I’d have to phone them…

  • BlueThroughCrimp says:

    Just as well Branson has a net worth of $4.1 Billion then, he can dip in to that.

    • tony says:

      Bolstered by the fact Virgin Health won an undisclosed sum from the NHS a couple of years back and also paid no corp tax on £8m profit/£200m revenue which it generated from NHS outsourcing.

      Creative accounting may be here to stay, but this cuts both ways.

      • BlueThroughCrimp says:

        Exactly, I have no sympathy for him. If he lost 3 Billion, he’d still be a Billionaire.
        Staff, particularly the lower paid ones, can’t afford to take a hit like this, my sympathy is with them.

  • jamie says:

    Be nice to see some information on this thread about how existing schedules are affected, for example for those trying to get back from USA rather than stuff about salaries etc – which doesn’t add any value.

    • Peter K says:

      One word to this comment – Wow!

    • paulm says:

      Yeah don’t worry about the staff taking pay cuts and how it affects them…

      • jamie says:

        What relevance is that to a travel website. Try Twitter if that’s your thing

        • paulm says:

          Well it’s relevant as they way it’s going there won’t be as many flights/airlines. You could also think about others and the bigger picture.

          • Callum says:

            And how on Earth would that help anyone?

            It reminds me of the “thoughts and prayers” every time there’s an incident in the US. You going on about how sad it is they’re suffering isn’t going to put any food on their table, and I don’t know why they’d care that you feel bad for them?

        • BlueThroughCrimp says:

          Practice what you preach.

    • Dan says:

      Speechless

    • Lady London says:

      For goodness sake don’t spoil these last few days by actually saying something on-topic
      🙂

    • Shoestring says:

      there are quite a few intolerant nasty posters around, let’s be kind & put it down to stress (though it’s obvs inherent nastiness & immaturity)

      try and challenge the ideas not the person, people

  • Mark says:

    If there’d been a worldwide media blackout, life would be continuing as normal.

    It’s not going to be long before the world realises that this is going to become the norm and that life just has to go on.

    • Grim Reaper says:

      …until a few million old and at risk individuals start dropping like flies from an unexplained illness.

      There is no guarantee that life “goes on”, which is why brave people like Li Wenliang publicized the virus. But hey I guess it’s more important that our 241 vouchers don’t expire, right?

    • Callum says:

      I’m always curious about the personalities of people who are this flippant. So you think multiplying the annual flu death rate by ten and having vast swathes of the workforce off sick is inconsequential? A few million deaths don’t matter because they’re old and so would have died in a few years anyway?

  • jamie says:

    Exactly the questions that need updating. I’m seeing VA flights from US cities to UK still on schedule, and I think that will continue until all/most returning brits are repatriated – but there must be a tipping point when flights will stop.

    • P says:

      Maybe the answers are not known and so that’s why they are not mentioned in the extensive updates made so far in this blog.

      This news, helping to also bring a human element to the wider tragedy, is just as relevant as your specific query, and likely more relevant and interesting to most readers.