Virgin Atlantic said Friday it will cut 1,150 jobs after completing a $1.6-billion restructuring plan aimed at rebuilding the company during the travel downturn caused by the coronavirus pandemic.
The deal had been approved by the High Court in London earlier this week, and was formally recognized by a U.S. court — the last step of the legal process in the long-haul carrier’s efforts to rebuild its balance sheet and emerge from the financial crisis.
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“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.”
The airline announced the refinancing package in July to ensure its survival after passenger numbers dropped 98% in the second quarter.
It includes nearly $800 million of support from the airline’s owners, Virgin Group and Delta Airlines, around $600 million of deferred payments to creditors and $225 million of financing from U.S.-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. The airline says it doesn’t expect passenger volume to return to pre-pandemic levels until 2023.
VIRGIN AUSTRALIA AIRLINE TO BE SOLD TO US-BASED BAIN CAPITAL
The aviation industry 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 assistance until passengers feel comfortable returning to the skies.
Virgin Atlantic had pushed for passenger testing and said it was the only way to enable the removal of travel restrictions to open up flying to key markets.
Virgin flies from London’s Heathrow Airport and Manchester to destinations in the U.S., China, India, Pakistan, South Africa, Nigeria, Israel and the Caribbean.
Transatlantic flying, according to Reuters, makes up 70 percent of the airline’s network.
Delta invested $360 million in Virgin Atlantic in December 2012, acquiring a 49% stake in the airline. Virgin Group owns the remaining shares.
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Elsewhere, Virgin Australia’s creditors said Friday they are selling the airline to Bain Capital as part of a deal that will see 3,000 job cuts, according to Reuters. That airline – which reportedly is planning to emerge from bankruptcy with cheaper fares – is expected to end many of its international flights.