Virgin Atlantic Cancels Most Flights, Grounds Fleet

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Virgin Atlantic has this week announced how they plan to weather this current storm, given a huge reduction in travel demand and new government restrictions on flights.

Virgin Atlantic is seeing negative net bookings

This doesn’t come as a surprise, but Virgin Atlantic is seeing negative net bookings, meaning that more people are canceling flights than booking flights.

The airline says that the reduction in demand was expected, but the speed and extent to which things have happened requires the airline to take immediate and decisive action. Virgin Atlantic is now putting drastic measures in place to ensure cash is preserved, costs are controlled, and the future of the airline is safeguarded.

Virgin Atlantic reduces schedule by 80%, grounds 85% of fleet

Virgin Atlantic has announced that they will be significantly reducing their schedule:

  • 80% of flights will be cut by March 26
  • 75% of Virgin Atlantic’s fleet will be grounded by March 26, and 85% will be grounded by April

Virgin Atlantic will be focusing on core routes, depending on customer demand. The airline will continuously adjust this as the situation evolves, though I’d expect service to be limited to some of the routes that currently have multiple frequencies, like New York, Los Angeles, and maybe Boston.

Virgin Atlantic is grounding 85% of their fleet

Virgin Atlantic permanently cutting Newark flights

Virgin Atlantic has announced that they are permanently cutting their London Heathrow to Newark route.

I find this announcement to be odd because that’s the only permanent route cut the airline has announced. Interestingly Newark is an airport where Virgin Atlantic has a Clubhouse, so I imagine that will be closed.

Virgin Atlantic is cutting flights to Newark

Virgin Atlantic asks staff to take eight weeks leave

Given the huge reduction in capacity, Virgin Atlantic is also asking staff to take leave:

  • Staff are being asked to take eight weeks unpaid leave over the next three months; in other words, they’ll be asked to take up to two thirds of the next three months off
  • The cost of this will be spread over six months’ salary, to drastically reduce costs without job losses
  • The airline has the support of BALPA and UNITE, which are the unions representing many of their employees

On top of that, Virgin Atlantic is cutting staffing costs in other ways, including:

  • 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

Virgin Atlantic is asking staff to take eight weeks leave

Virgin Atlantic wants help from the government

As is the case with so many airlines, Virgin Atlantic is looking for help from the government. The company wants the government to provide emergency credit facilities to a value of £5-7.5bn, to bolster confidence in the industry, and to prevent credit card processors from withholding customer payments.

On top of that, the airline wants slot restrictions to be waived through the summer of 2020, so that the airline doesn’t have to fly empty planes just to maintain slots.

Virgin Atlantic is seeking help from the government

Bottom line

Virgin Atlantic isn’t going quite as far as some other airlines, in the sense that they’re continuing some level of operations. However, it sounds like they’ll be operating well under a dozen planes in key markets, and canceling everything else.

The airline is also asking employees to, at a minimum, take eight weeks of unpaid leave in the next three months.

Comments
  1. Virgin Atlantic is offering rebooking of flights with change fee waiver – rebook until 12/31/20. However rebooking is problematic as booking class must be maintained for all segments, and I am seeng a $250 fare increase for any routing I’ve asked for….. which obviously negates any benefit of the change fee waiver. Plus the airline now looks to be on shaky ground in general.

  2. @Will

    Yup, that is the study that finally got this administration (and, miraculously, Fox News) to take this seriously.

  3. Ahhh The first flight Virgin Atlantic ever took was London to Newark. Sad that the route is no more.

  4. “Continuing to offer an enhanced company sick pay policy … with terms reduced to 12 weeks full pay”

    That’s just mystifying: in what way is reducing sick pay an “enhancement”?

    Like quasimodo, I’d say a 15-20% salary cut for senior management shows they’re not serious. I’d also withhold exec bonus payments until all public money has been repaid.

    I bet Branson is kicking himself for not getting rid of his shares in VS just a few weeks ago, when Delta wanted to buy all his stake.

  5. Compare this to the sweetheart deal American is offering its pilots.

    Courtesy of the US taxpayer

  6. “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”

    So they’re asking regular employees to take 2/3 of their days off (essentially a 67% pay cut), but the executives making millions are going to just take a small 15-20% haircut? Sounds like a great deal!

  7. This is what happens when most of your airline’s business was built around the US to the UK. Virgin might have been able to isolate this part of its business if it had more regional European flights, more Asia flights, etc. I find it odd that Delta’s CEO is giving up his pay but Virgin’s CEO is only taking a cut. Newark also never made sense after the tie-in with Delta at JFK. But permanently losing Newark stinks because didn’t they just spend a lot of money renovating that lounge?

  8. @Will
    the 18 months in the article you linked refers to the time to develop a vaccine, not the length of potential quarantine.

  9. Lucky, thanks for keeping us posted about what all the different airlines are doing to stay afloat. Interesting and possibly relevant to help me decide which airline to fly with in the future based on how they treat their employees.

    @Jackie
    so sad you had to cancel your vacation, nevermind the thousands of people who died, and the thousands more that will. You must be a really special person. LOL!

  10. Newark is a shocker as that was their very 1st route they flew at inception in maybe 82-83 ? Remember their first 747 flying over my home then in Wayne New Jersey every afternoon on final approach to Newark Airport. They were considered something really different in those days.

  11. @Barry Chaplin –
    Since Orlando is a leisure route for Virgin, it won’t come back until the demand does. However, this is also a big route for the airline and they fly up to 7 747’s a day from the UK, and since it’s the summer, I’d expect them to partially restore service if this situation gets better by then (though it’s too early to call now).

  12. Apparently, Virgin Australia’s owners are not Australian… Mostly Chinese, United Arab Emirates, etc. I hope they can help bail out the airline and save its employees and customers.

  13. I have to pay my final balance to a villa next week but I’m unsure the flights will go in June!? I will loose all money in Villa if I cancel can’t claim back for it, I can’t see any flights being on in June now

  14. @Kristina Owen I very much doubt Virgin will be upto a full flying schedule by then. Both the US and UK are bouncing around 12-18 weeks before life begins to return to normal, I feel for your situation but better not to waste money than take a risk, if you look over on other forums so many passengers have been left stranded in Orlando and it looks like virgin are letting some of them down and they are making their own way home via JFK.

  15. I fail to believe they are permanently shutting the VS1 and 2; those flights are almost always full (not least in Upper) – and, as said above, the EWR Clubhouse was just recently renovated.

    I fly that route at least twice a month – and the ability to fly into and out of Newark, not JFK, is a key factor for me.

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