Virgin Atlantic plans job cuts after $1.6bn rescue

The cuts could result in a 40% reduction in the workforce since the start of the Covid-19 crisis

Virgin Atlantic will eliminate hundreds more jobs to preserve cash as demand for long-distance flights remains depressed and Britain winds down its worker furlough programme, a person familiar with the plan said.

The cuts, which could result in a 40 per cent reduction in the workforce since the start of the Covid-19 crisis, are likely to be announced later Friday, according to the person, who asked not to be named.

The move would come less than 24 hours after Virgin secured final legal approval in the US for a $1.6 billion (Dh5.9bn) rescue package that chief executive Shai Weiss said was vital for it to survive the pandemic.

The deal will allow for funding from US hedge fund Davidson Kempner Capital Management and Richard Branson, the airline’s billionaire founder.

While European short-haul flying has begun to recover with the end of government lockdowns, the long-haul routes in which Virgin specialises remain depressed by continuing border curbs and a lack of demand. International traffic is down 92 per cent compared with a year ago, according to the latest International Air Transport Association figures.

Britain is also beginning to wind down its government-funded job furlough programme, meaning companies will have to contribute to the cost of paying laid up workers from September 1. Virgin has about 4,000 employees on the plan.

The carrier started the year with a workforce of about 10,000 people, but saw demand slump to a quarter of 2019 levels in the first half and was denied aid by the UK government after the virus grounded flights. It has since eliminated 3,150 positions through compulsory cuts and a further 400 through voluntary severance.

Virgin has also scaled back operations, closing a base at London’s Gatwick airport. In pursuit of the few passengers who want to fly long haul, the company announced its first routes to Pakistan after bans on that country’s flag carrier created a gap in the market.

Sky News reported earlier that the company is planning more than 1,000 job cuts, or about 15 per cent of the remaining workforce of around 6,500.