Virgin Atlantic Airways Ltd. will eliminate 3,150 jobs, or a third of the workforce, and shutter its London Gatwick hub to ride out the coronavirus crisis after struggling to secure a UK government bailout.
The job cuts will be discussed with unions in a 45-day consultation, the carrier founded by billionaire Richard Branson said in a statement Tuesday. Flights will be focused on the main London Heathrow base and Manchester, though Gatwick slots will be retained in expectation of an eventual recovery there, it said.
The steps are necessary to resize the trans-Atlantic carrier for what may be a three-year slump in demand, Chief Executive Officer Shai Weiss said in the release, adding that discussions on funding with stakeholders including the U.K. government are ongoing and have been constructive.
“We have weathered many storms since our first flight 36 years ago, but none has been as devastating as COVID-19,” he 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.”
Arch rival British Airways plans to slash as many as 12,000 posts, or 30% of the payroll, and is looking at exiting Gatwick, which attracts less business traffic than Heathrow. Other European carriers are hacking back at staff levels, with some seeking multi-billion euro bailouts.
The Balpa pilot union said the Virgin cuts represent a “terrible blow” for the industry and called on Prime Minister Boris Johnson’s government to stop “prevaricating” over aid measures.
“Without immediate action by the government we will see the once world leading industry decimated and that will have an effect throughout the UK economy,” the union said in a statement.
Branson’s travel and leisure empire is already under stress after Virgin Australia Holdings Ltd., founded in 2000, was placed into administration.
Virgin Atlantic will also permanently ground its fleet of seven Boeing Co. 747 jumbo jets as of now, with four Airbus SE A330s also exiting in 2022, by which time the fleet will have been pared to 36 newer twin-engine planes.
The Virgin Holidays division will also close 15 per cent of its retail outlets and be rebranded as part of the airline. Weiss said the measures are necessary to deliver a return to profitability in 2021.