Virgin Atlantic has announced it will be permanently retiring its Boeing 747-400 fleet with immediate effect, leaving London Gatwick and making 3,150 staff redundant.
This is part of the strategy to reduce costs as the airline comes to terms with the impact of coronavirus. This is not an alternative to a bailout loan and more likely an attempt to show that it is ‘getting its house in order’ – Virgin Atlantic is still in talks with “several stakeholders” including the government.
The airline expects to reinstate 60% of its pre-pandemic capacity by the end of the year although this is obviously just a finger-in-the-air number at the moment.
Virgin Atlantic is culling its Boeing 747 fleet
Until today, Virgin Atlantic had seven Boeing 747 aircraft in its fleet with an average age of 20 years. Ditching these aircraft now is the obvious thing to do, not least because they are getting long in the tooth. The Boeing 747 fleet was due to be replaced in any event by the new A350 fleet of which four have already arrived since last September. The remaining eight, half of which were designed for leisure routes with a different configuration, are yet to be delivered – Virgin did not say today whether it still expects this to happen.
Dropping the Boeing 747 fleet also makes sense from a fuel efficiency perspective. The trend in recent years has been to move away from thirsty four-engined aircraft towards twin-engine aircraft. With additional weight savings from its carbon fibre fuselage and improved aerodynamics, the A350 is around 50% more efficient than a Boeing 747.
In the medium term, Virgin Atlantic will be retiring four A330-200s by 2022 as previously planned. These are the ex-Air Berlin planes that were introduced in 2018 to help Virgin cope with its troublesome Boeing 787 fleet and were only on a short lease. These are likely to be replaced by A330neos which are due to arrive in 2021, although given the circumstances this is likely to slip.
Virgin Atlantic withdrawing from Gatwick
In addition to rationalising its fleet plans, Virgin Atlantic is also withdrawing from London Gatwick. It will be moving all London flights to Heathrow whilst retaining its slot portfolio at Gatwick so that it has the opportunity to return in the future.
As well as being a cost saving measure, reducing duplicated overheads, it will also ensure that Virgin Atlantic protects all of its Heathrow slots for the future.
Quite how it will manage to retain the Gatwick slots is a different question. There is a ‘use it or lose it’ rule in place for take-off and landing slots that require at least 80% use. Whilst this has been suspended until October, it is not clear how Virgin Atlantic will fulfil the requirements beyond then.
In normal circumstances it may have been able to lease them out to another airline, but with most companies cutting capacity there is likely to be a glut of slots available. It is possible that it may end up subsidising a smaller operator to pick up the slack.
The Gatwick routes were primarily leisure focused, such as Antigua, Barbados, Havana, Montego Bay, Orlando and St Lucia. There were also plans to launch a Gatwick to New York service this Summer, with Delta also due to launch Gatwick to Boston.
The Manchester operation will remain. Glasgow was not mentioned.
3,000 redundancies announced
As you would expect, closing the Gatwick base will affect a lot of Virgin staff. The airline has is seeking 3,000 redundancies, representing a third of its workforce. These will be made across the board, although many are likely to occur at Gatwick.
Finally – and slightly oddly, given that it is hardly a top priority – Virgin Holidays will be rebranded as Virgin Atlantic Holidays. 15% of the current shops will be closed.
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