Virgin Atlantic plans to cut more than 3,000 jobs and shut its operations at Gatwick airport in the latest sign of the chaos caused in the airline industry by the coronavirus.
The 3,150 planned redundancies represent almost one in three of Virgin Atlantic’s workforce of 10,000, prompting calls from unions and Labour for the government to step in to save the jobs.
Airlines across the world have been rocked by the grounding of flights as a result of the pandemic lockdowns, which have put their business models in jeopardy.
Virgin Atlantic’s job cuts are the latest blow to the UK and Irish aviation industries, with tens of thousands of redundancies planned. International Airlines Group plans to cut 12,000 jobs at British Airwaysand 900 at Aer Lingus. Irish budget carrier Ryanair has also announced 3,000 job losses, while aerospace manufacturer Rolls-Royce is considering as many as 8,000 redundancies.
Virgin said it could take three years for flight numbers to return to 2019 levels, and that it had to cut jobs to survive.
At the time of the lockdown, according to flight schedules data research by Cirium, the airline was operating 422 a flights per week and carrying more than 100,000 passengers. In February Virgin accounted for 19% of the capacity crossing the Atlantic, with 258 weekly flights – second only to British Airways
Sir Richard Branson, the airline’s founder, has asked for a bailoutbut the UK government is unwilling to provide a separate package for airlines beyond the help offered to all businesses.
However, the Labour party called on the government to step in to protect the jobs of Virgin Atlantic employees.
“The government is failing workers by not stepping in and protecting these jobs,” said Jim McMahon, Labour’s shadow transport secretary. “Labour has consistently argued for a sector-specific deal for aviation, and the government must do more to ensure airlines and airports can operate safely when the time is right to transition out of the lockdown.”
Virgin Atlantic’s efforts to secure a bailout were thought to be hindered by the fact that US airline Delta Air Lines, which owns 49% of the company, had not injected more money.
Activists have expressed concerns that government funds should not be used to bail out Virgin because majority owner Branson is a billionaire who is not resident in the UK for tax purposes.
Branson last month pledged to mortgage his Caribbean island to help raise money for his stricken Virgin Group, promising to inject $250m into the company mostly to help the airline.
Campaigners have also raised concerns that a bailout of polluting airlines would impede progress on fighting the climate crisis.
European airlines have so far received pledges of more than €30bn of goverment suppport.
Union representatives said the news represented “another devastating blow” for UK aviation, adding that cuts were premature while the government was still paying 80% of furloughed workers’ wages.
The announcement also added to concerns about the future of jobs at Gatwick airport. British Airways has cut back Gatwick operations and warned it could pull out altogether, while Norwegian Air Shuttle, the airport’s third-largest carrier, narrowly avoided bankruptcy after investors and creditors agreed a plan that will allow it to access state aid.
Diana Holland, the assistant general secretary of the Unite union, said she had “grave concerns about the impact on Gatwick airport”.
A Gatwick spokesman said the airport remained “very optimistic about the long-term prospects of Gatwick airport and our resilience as a business.”. He added that Virgin Atlantic would retain its flight slots at the airport so could return when demand recovers. The airline flies mostly to holiday destinations, including St Lucia, Barnados and Orlando, from Gatwick.
Alongside the job cuts, subject to consultation, Virgin will significantly restructure its operations. It will immediately retire its seven 747 jumbo jets, and move Gatwick flights to London Heathrow, while retaining its base in Manchester.
Shai Weiss, Virgin Atlantic’s chief executive, said: “To safeguard our future and emerge a sustainably profitable business, now is the time for further action to reduce our costs, preserve cash and to protect as many jobs as possible. It is crucial that we return to profitability in 2021.
“After 9/11 and the global financial crisis we took similar painful measures, but fortunately many members of our team were back flying with us within a couple of years.
“Depending on how long the pandemic lasts and the period of time our planes are grounded for, hopefully the same will happen this time.”
The Department for Transport has been approached for comment.