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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About Head for Points
Is BA hoping that some people will buy a stack of Avios under the new promotion then blow them on RFS seats in Y?!
They’re hoping we forget the refund / voucher fiasco.
RFS seats in Y are often great value. I don’t get your point.
She may be talking about those RFS being trialled for JFK.
cant be long before the super cheap intra-US avios redemptions become more expensive…..
RFS rolled out to sub 10hrs flights with few exceptions. All ME cities like DXB, AUH, MCT, BAH are already loaded and available in plenty for Xmas to NY and beyond.
And Dubai
Does this make Virgin less appealing to the Government? It’s brand already outweighed it’s value to GDP and now they are down to 7,000 employees (all UK?). Not very big in the grand scheme of things.
All of which said, my sympathies to those involved. It is a terrible situation.
I think one of the issues UK Gov have had with Virgin’s initial application for funds was that they were too optimistic, this is probably a step towards to the realistic approach of stripping back to the basics. Getting out of Gatwick to me signals that they are expecting only business and premium leisure travellers to be flying.
I think that’s a vast oversimplification that so many people make on here. There are significant numbers of non premium leisure travellers flying from Heathrow as well – people often assume they’re concentrated in Gatwick but that’s not true, and I would go as far as to say that the Heathrow timetable couldn’t possibly be maintained without them.
My assumption on motive would be that Heathrow has pretty much the same catchment area as Gatwick does, and they want to consolidate in one place for the time being.
You should remember that the ability to get to Heathrow cheaply on tube (vs expensively to Gatwick, Luton or Stansted on the train) means that the overall cost of BA out of Heathrow vs easyJet out of Luton, if you live in central London, is very similar. Heathrow is also a far more pleasant experience than Luton or Stansted. Both of these will drive leisure traffic.
I think you can honestly also put Gatwick, so far as the train is concerned, ok to reach timewise from Central London particularly East-ish Centralish areas. Train fares to LGW are still too high if you don’t have a discount card though.
But train to Luton from London is a complete ripoff even with a traincard discount. Especially since Luton airport has only recently started work on a final train link that actually goes into the Luton airport.
I think there are a lot of people coming from North of London who would find the train link to Gatwick easy to connect to and use. Some trains also stop at Luton Town on the way to London. This can be ok to connect to Luton Parkway then bus to airport if you really must use Luton.
For those coming from North/South/East of London by public transport Gatwick is much more useful than Heathrow. All subject to the trains and station facilities like lifts and escalators actually working of course.
Arguably the other way, that Virgin is getting ‘real’ about its future size and shape and better positioned to survive post any bailout.
If VS was saying ‘lend us £500m so we can start flying 10 flights a day again to New York from 1st June’ then you would not exactly consider it a good use of taxpayers money.
It’s a double edged sword. The more real they get about their prospects the less meaningful they become. I still wonder it the Govt fundamentally has the appetite for this deal. Time will tell.
Fully agree. In the last 8 years, Virgin has become an unessential competitor. I strongly believe Norwegian would do a way better job, especially on the price segment. It wasn´t Virgin that was driving down prices… it was Norwegian. Let´s hope they survive and sooner rather than later we see them again flying from LGW.
Pretty obvious comments to me. But it’s been difficult for Virgin to raise prices when THEY have competition to deal with as well. And they are hardly competitive when looking at their routes generally… squeezed all round Like their Australian cohurts, they need to get back to basics.
Norwegian driving down by prices yet is consistently losing a fortune!
Did anyone here by any chance win the golden tickets virgin were giving out on black friday last year? Some really cheap destinations but I wonder if and hope that people get to fly them!
Yes, I managed to get one to Miami for £1 (return), and flew there and back in February 🙂
oh sweet i went to las vegas in february! Loved it!
can i ask you did you use your points or was it the fare was £1 + taxes?
the latter
I won one for Shanghai in late February…. (that didn’t happen obviously) but they did change it from me at no cost to a return to Hong Kong instead as that was still flying then (and from there did a quick week long hop over to Thailand).
And then today I was meant to be flying to Sydney on the £200 Qantas 100 year promotion.
Last year seemed to have a lot of luck in getting these flights, this year less so luck-wise for actually going on the flights….
Awww i hope you all get to to go your flights soon! I got a BA flight to RIO and also Miami and New York from MAnchester on virgin but lets see!
Delta showing up LGW to BOS & NYC routes, these are not VS codeshare ones but on DL metal. Possibly LGW slots outsourced to Delta aa part of their debt recovery!!
These were planned already. And can’t be removed that quickly from schedules – I imagine Delta won’t have had time to decide yet what to do going forward.
Unlike BA, VS crew worked from both Gatwick and Heathrow (they have free shuttle buses between them if crew live nearer one than the other), so logically any redundancies will be ‘across the board’. The only staff ‘at Gatwick’ are in the terminals and lounges. Your last paragraph is therefore as redundant as the staff.
A word here was for VS to consolidate at Gatwick — but if leisure routes to Caribbean destinations become abandoned, despite being profitable in the past…
An opportunity to close Gatwick terminal-by-terminal and make it a modern airport. But that would require a VERY long-term infrastructure investment, usually implemented with funds from Chinese companies..
An opportunity to close Gatwick terminal-by-terminal……You missed out the period!!
Makes the extra runway at LGW fanbase look a bit silly now, as when the chips are down the airlines choose LHR.
LGW did however take the Summer strain off LHR – for those who had the fortitude to travel the extra hour on the M25 past LHR to get to the wretched place………so, one advantage of living in West Sussex!
Not really silly. At a time of decreasing demand would you choose to keep your largest or second largest market open? Conversely at a time of increasing demand it makes sense to expand your second largest market if it can be done quicker and cheaper than your primary.
Except it doesn’t, because no-one has ever claimed that airlines would choose Gatwick above Heathrow… That’s completely nonsensical – how on Earth would Heathrow be able to charge higher fees than Gatwick if that was the case?
The argument has always been that Heathrow is full and they believe it will be more practical to expand Gatwick than Heathrow. Given air traffic is eventually going to get to pre-virus levels again, the same argument still applies.
I wonder if long haul (lets call it World Wide) RFS’s will become available for premium seats WT+ then Club……….in order to drum up a bit of business post C19? That would be a way to get a start on using a very large stockpile of free Avios – never being a buyer of coupons.
It’s sad when employees become pawns in an elaborate game with the govt.
Owen Jones described this situation in “The Establishment” where Vodafone’s reasoning for not paying (what the general public perceived to be) their “fair share” of corporation tax was that their large number of employees paid income tax & NI, & the company paid employers NI (unlike, say the BBC – see IR35).
There goes a third of that PAYE/NI taxation due to the govt “refusing” VA’s request (I know Rob has covered the debt reasons).
I recall Airbus’s letter (with RR) saying 330neo was dependent on VA. I remember when A350 (not XWB) was, what is now, A330neo until Steven Udvar Hazy (International Aircraft Leasing or similar) said it wasn’t good enough.
Yes it’s miraculous how many UK employees Vodafone forced to move to Luxembourg. My friend there said they were offering very, very nice relocation packages as well.
Clearly it was worth Vodafone going to all tphis trouble and paying a lot of money, to do this and not pay their fair share of UK corporation tax.
@MelonFarmer – I don’t have a lot of time for Owen Jones as I’ve always found he starts with the point he has decided to make and just acts like anything that contradicts it doesn’t exist. Vodafone’s reason was never that their employees paid enough, it was that they could legally pay less; the employee stuff was PR. I’m always astounded by how much, actually criminal, tax dodging goes on by normal individuals; who would be amongst the first to criticise Vodafone. Be it the tradesmen who takes cash in hand, the person who asks for a cash rate knowing it’s only cheaper because it’s dodging tax, people who order things from China labelled as gift or falsely priced, people working second off the books second jobs during furlough, people who travel abroad to buy fags/booze/etc cheaper then sell it when they return (without declaring it and paying duty) or those that buy from them. I honestly would be surprised if less than half of the adult population hadn’t done something which saved them money by avoiding tax they were legally obliged to pay.
In this case I’m not sure I see these employees as pawns in some national game. The business isn’t viable as is, it isn’t viable for the government to indefinitely prop up any company that might fail no matter how in-viable their business model even if the company won’t change it.
‘ avoiding tax they were legally obliged to pay.’ that is tax evasion not avoidance.
This is all part of the green recovery. The less flying we do, the better.
Not sure if you’re a troll, but perhaps you’re reading the wrong blog?
oh no! i just spluttered my cappuccino down my clean top and I have a Zoom call on its way. PJ bottoms survived though!
Ché ?
May we assume that saintly Virgin will be paying generous sums to those made redundant, not like evil BA?
I doubt it, BA have sowed the seeds for many companies and industries now. Tough sh*t, take us to court if you can.
Will be as evil as BA. VS has NO cash.
Or the same maybe..