News / Virgin Atlantic takes 'drastic' action as it fights to 'weather the storm'

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Virgin Atlantic has announced “drastic measures” as it battles to cope with the slump in demand.

This morning the carrier said it needed “immediate and decisive action” to preserve cash, control costs and safeguard its future.

From tomorrow, it will start to implement an 80% reduction in flights by 26 March, and park approximately 75% of its fleet, rising to 80% in April.

Which routes are operated will be subject to “constant review” – but London Heathrow to Newark will be “permanently terminated with immediate effect”.

Staff have been asked to take eight weeks’ unpaid leave over the next three months, with the cost spread over six months. The airline thanked unions BALPA and UNITE for their support on these measures.

It is also offering staff a one-time voluntary severance package and sabbaticals and is deferring pay increases until January. The chief executive has cut his own salary by 20% until the end of the year, while the executive leadership have trimmed theirs by 15%.

The airline has also urged the government to offer support, including emergency credit facilities of between £5bn and £7.5bn for UK aviation, and slot alleviation for the full summer season.

An airline spokesperson said: “With this support, airlines including Virgin Atlantic, can weather this storm and emerge in a position to assist the nation’s economic recovery and provide the passenger and cargo connectivity that business and people across the country rely on.”

The airline made no mention of whether it will use passenger aircraft for cargo. Rival IAG, however, which is also cutting some 75% of its capacity in April and May, said it was considering using its planes for cargo-only.

Media reported that chief executive Willie Walsh said this morning governments “need to appreciate” the strong cargo demand.

“Our intention is to try and keep as much of our capacity available for critical supplies that need to be shipped around the world,” he said. “We may operate some of our passenger aircraft just for belly-hold cargo to ensure we keep critical supplies moving.”

He noted that airports had been co-operative about the costs for grounding aircraft.

“Charging structures at airports are often designed to be very penalising to aircraft being parked – so we would expect airports to play their part.

“We’ve had good co-operation so far and we’ve already started parking a number of aircraft away from our home base. And we do have significant flexibility to park aircraft on British Airways-controlled property around [London] Heathrow.”