Virgin Atlantic to Cut Jobs as Transatlantic Demand Continues to Dwindle

Virgin Atlantic said Friday that it will cut more than a thousand jobs across the company as part of a 1.2-billion- pound ($1.59 billion) restructuring package as the airline prepares for meager transatlantic demand and continued pandemic-related uncertainty for the rest of 2020.

Transatlantic flights represent around 70% of the airline's network, which has taken a hit since the pandemic forced many airlines to ground their fleets in response to global travel restrictions in March.

Even as restrictions were lifted, quarantine requirements for travelers arriving in the U.K. from the U.S. have been subject to two weeks of quarantine, further dampening demand.

The airline said it is calling on the governments of the U.K. and the U.S. to introduce testing regimes in lieu of travel restrictions.

"Based on current outlook, the airline is planning to a scenario in which transatlantic flying from the U.K. does not extend beyond current skeleton operations until the beginning of 2021," the company said.

In this scenario, Virgin Atlantic said capacity operated across its network in the fourth quarter would be around only 25% of 2019 levels, and revenue in 2021 could be half of what it was in 2019.

The airline's restructuring plan is intended to deliver the refinancing package over the next 18 months, which will complement self-help measures already taken by the airline.

"Unfortunately, despite actions already taken to reshape and resize the business, regrettably the airline must go further one last time with changes at scale, to ensure it emerges from this crisis," it added.

Virgin Atlantic said it has begun a 45-day consultation period with unions Unite and Balpa regarding the layoff of 1,150 employees across all functions.

Additionally, the company said it is introducing a voluntary company-led and financed furlough scheme for a further 600 crew when the U.K.'s coronavirus job retention scheme expires in October.

The company also noted that global institutional alternative asset management firm, Davidson Kempner Capital Management, is providing GBP170 million in secured financing, and that it will receive an additional GBP450 million in deferrals from a number of its largest creditors and suppliers.

Write to Adriano Marchese at adriano.marchese@wsj.com


  (END) Dow Jones Newswires
  09-04-20 0852ET
  Copyright (c) 2020 Dow Jones & Company, Inc.

News, commentary and research reports are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.