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Virgin Atlantic to cut daily capacity by 80%, ground up to 85% of its fleet

March 16, 2020
3 min read
Virgin Atlantic to cut daily capacity by 80%, ground up to 85% of its fleet
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Virgin Atlantic is reducing its daily capacity by approximately 80% as a result of the ongoing coronavirus pandemic. As of March 26, Virgin said that it will begin prioritizing routes based on customer demand and will change its operations to reflect that.

Most significantly, Virgin is permanently terminating its route between London Heathrow (LHR) and Newark (EWR) with immediate effect. At this point, it remains unclear which other routes Virgin will suspend from March 26.

As a direct result of the decline in demand, also as of March 26, Virgin will ground approximately 75% of its fleet. During the month of April, the percentage of its fleet grounded will go up to 85%.

"The situation is deteriorating at pace and the airline has seen several days of negative bookings, driven by a huge volume of cancellations as customers choose to stay at home," Virgin said in a press release.

According to Planespotters.net, Virgin Atlantic has 41 aircraft in its fleet, comprised of A330s, A350s, 747s and 787s. At its peak grounding, Virgin will have up to 35 of those aircraft grounded — with only six in operation.

The airline is asking the U.K. government for help for the aviation sector, including emergency credit facilities to a value of £5 to £7.5 billion. It's also asking the government to lift its strict slot restriction rules for the entire summer 2020 season. Previously, the European Commission revealed that it had temporarily lifted the "use it or lose it" slot rules until June 30, 2020.

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In addition to cutting capacity and grounding some of its fleet, Virgin said that it's asking staff to take eight weeks unpaid leave over the next three months. The cost will be spread over six months' salary.

Virgin is also taking the following steps to reduce its costs over the next few months:

  • Offering a one-time voluntary severance package to all employees;
  • Offering a sabbatical of 6-12 months;
  • Deferring annual pay increases until review in January 2021
  • Reducing employer pension contribution for a period of one year;
  • Sick pay policy to be reduced to 12 weeks full pay; and
  • CEO Shai Weiss extending 20% pay cut to the end of 2020, with the airline's leadership team agreeing to a decrease of 15% for the same period.

Earlier this month, Virgin had laid out a plan to reduce its costs in the coming months, including the delay of its São Paulo route launch. However, as the industry continues to suffer as the coronavirus continues to spread and the decline in travel demand continues, Virgin has added on to these.

Related: Coronavirus crisis raises questions about if weaker airlines will survive

The airline has already announced that it's extending Flying Club elite members' status by an additional six months. Until 30 April, Virgin is also incentivizing passengers to book travel with an additional 2,500 bonus miles as long as the travel is completely by 31 May.

Last week, the U.S. government unveiled travel restrictions for foreign nationals coming from certain European countries. However, it wasn't until this weekend when the U.S. government changed its policy to also include foreign nationals travelling from the U.K. and Ireland — a move that affects most of Virgin's business.

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