Virgin Atlantic completes rescue plan; 1,150 jobs lost

Virgin Atlantic completed its €1.2 billion (US$1.6 billion) restructuring plan and cut 1,150 jobs on Friday as the airline sought to rebuild following the devastation caused by the COVID-19 pandemic.

The deal had been approved by the High Court in London earlier this week and was formally recognised by a United States court – the last step in the legal process in the long-haul carrier’s efforts to rebuild its balance sheet and to emerge from the crisis. It cut jobs as it announced that it was putting the plan into place and further downsizing across the business.

“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,” Virgin Atlantic CEO Shai Weiss said. “I truly hope that as demand returns, we will see many members of our team returning to us.”

Aviation has been devastated by the spread of the virus as governments around the world moved to curtail travel to safeguard public health. Airlines have been begging for government help until passengers feel comfortable returning to the skies.

Virgin Atlantic appealed for passenger testing and said it was the only way to enable the removal of travel restrictions to open up flying to key markets.

The airline announced the refinancing package in July to ensure its survival after passenger numbers dropped 98 per cent in the second quarter. It includes €600 million of support from the airline’s owners, Virgin Group and Delta Airlines; €450 million of deferred payments to creditors; and €170 million of financing from US-based Davidson Kempner Capital Management LP.

Virgin Atlantic, founded in 1984 by Richard Branson’s Virgin Group, has already cut 3,550 jobs, shuttered operations at London’s Gatwick Airport, and announced plans to retire 11 aircraft as it seeks to weather the slowdown in air travel. The airline says it doesn’t expect passenger volume to return to pre-pandemic levels until 2023.

Delta invested US$360 million in Virgin Atlantic in December 2012, acquiring a 49 per cent stake in the airline. Virgin Group owns the remaining shares.

Virgin flies from London’s Heathrow Airport and Manchester to destinations in the United States, China, India, Pakistan, South Africa, Nigeria, Israel, and the Caribbean.

– AP