Virgin Atlantic secures $1.5 billion deal, but return of transatlantic travel is ‘imperative to recovery’
Friday brought major news for the future of Virgin Atlantic, as it completed its $1.5 billion rescue plan. However, the good news in securing funding comes amid the announcement that the airline is making further cuts to operations in order to preserve cash.
The airline said on Friday that while it had completed its rescue deal to secure its future for the next 18 months, it would be cutting 1,150 more jobs. Earlier in the coronavirus pandemic, Virgin cut more than 3,150 jobs.
The airline said that it has been forced to make the cuts in order to survive. As a result of the ongoing coronavirus pandemic and its lasting effects, recovery has taken longer than expected. More specifically, the airline said that the lasting restrictions on travel on the transatlantic market has meant recovery has been slower.
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"The U.S. border closure and U.K. quarantine measures have been in place for far longer than originally anticipated," the airline said in a press release. "As the airline increases passenger operations, the opening of U.S. borders and removal of quarantine is imperative to recovery."
Virgin relies heavily on transatlantic travel, with the routes representing 70% of its network. Given the restrictions on entry to the U.S. and required quarantine on entry to the U.K., Virgin doesn't anticipate transatlantic flying to resume at a large scale until the beginning of 2021.
Currently, the airline is flying to New York, Los Angeles and Miami in the U.S. It will resume flying to Atlanta on Sept. 15.
"The completion of the private-only, solvent recapitalisation of Virgin Atlantic removes much of the uncertainty we faced and represents a major step forward in our fight for survival," Virgin CEO Shai Weiss said in a statement.
However, the airline has doubled down on pressuring the U.K. government to rethink its quarantine policy. Since the start of the U.K.'s travel corridor scheme, travelers entering the country from non-exempt countries have had to quarantine for 14 days.
Heathrow Airport and airline executives from around the U.K. have pressured the government to rethink and offer a testing alternative for travelers to bypass the quarantine requirement. The travel industry believes that the testing option would revitalize the tourism industry in the U.K. Since March, the U.S. has restricted non-nationals coming from much of Europe.
"The airline is calling for both U.K. and U.S. governments to introduce robust passenger testing regimes to lift travel restrictions whilst protecting public health," the airline said in a statement.
In May, Virgin announced its first round of major cost-cutting measures. Among them, the carrier announced the immediate retirement of its Boeing 747s, consolidating London operations exclusively to Heathrow and cutting more than 3,000 jobs.
Earlier this week, Virgin unveiled its plans for a return to service on five additional routes this September. It also announced an enhanced onboard meal experience for passengers across all cabins.
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