Virgin Atlantic has today confirmed the sanctioning by the English High Court of its £1.2 billion rescue package, marking the completion of the process which was announced in July.
The carrier said that “This final step in the legal process paves the way for the Company to continue its efforts to emerge from the Covid-19 crisis a sustainably profitable airline”.
But Virgin warned that “the devastating impact of Covid-19 on global aviation continues unabated and the airline must take further steps to ensure survival”.
It said that based on current outlook “the airline is planning to a scenario in which transatlantic flying from the UK does not extend beyond current skeleton operations until the beginning of 2021”.
Under this scenario capacity across its network for the fourth quarter of 2020 would be around 25 per cent of 2019 levels, and revenues in 2021 “could be only 50 per cent of 2019 levels”.
Virgin said that current US border closure and UK quarantine measures mean that “it has not been possible for many British nationals to enter the US upon arrival from the UK, Ireland and the Schengen Area”, adding that transatlantic flying represents 70 per cent of the carrier’s network.
The airline called on UK and US governments to introduce “robust passenger testing regimes to lift travel restrictions whilst protecting public health”.
In May Virgin announced plans to axe 3,000 jobs and quit Gatwick airport, but today it said that “regrettably the airline must go further one last time with changes at scale, to ensure it emerges from this crisis”.
This will entail a planned reduction of a further 1,150 jobs across all functions, with a 45-day consultation period with unions beginning today.
Virgin said that “To mitigate as many cabin crew redundancies as possible, additionally, the airline is introducing a voluntary, Company-led and financed furlough scheme for an additional 600 crew when HM Government’s Coronavirus Job Retention Scheme ends at the end of October”, adding that “Should HM Government extend its Scheme, the airline intends to continue to benefit from it”.
Commenting on the news Shai Weiss, CEO, Virgin Atlantic said:
“Together, we have achieved what many thought impossible and that is down to the efforts and sacrifices of so many across the Company. The completion of the private only, solvent recapitalisation of Virgin Atlantic removes much of the uncertainty we faced and represents a major step forward in our fight for survival.
“We greatly appreciate the support of our shareholders, creditors and new private investors and together, we will ensure that the airline continues to provide vital connectivity and competition.
“Now we must focus our efforts on securing our long-term future, by ensuring that Virgin Atlantic not only survives but thrives as passenger demand returns. It’s clear that the introduction of passenger testing is the only way to enable the removal of travel restrictions and open up flying to key markets, while protecting public health. We will continue to work with our industry partners to press for urgent government action.
“After the sacrifices so many of our people have made, further reducing the number of people we employ is heart-breaking but essential for survival. I truly hope that as demand returns, we will see many members of our team returning to us.
“The unique spirit of our people, the passion we have for our customers and each other, and the drive to do things better has been tested but not broken. There will be a recovery, the timing and speed of which is uncertain.
“When our customers return to the skies we will be there to welcome them onboard with belief in our future. It is then that we will appreciate that everything we have done, painful to so many, was worth it.”