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Virgin Atlantic to Cut 7 Percent of Workforce

February 12, 2009 By: Jena Tesse Fox


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The Guardian is reporting that Virgin Atlantic will be cutting 600 jobs, or about 7 percent of its workforce, as long-haul air travel suffers in the economic downturn.

The airline, which was founded by Sir Richard Branson, said it hoped to avoid compulsory redundancies but did not rule them out as it started a 90-day consultation period with staff and trade unions. The carrier, which is celebrating its 25th birthday with a glitzy advertising campaign, said it was reducing staff numbers in line with a 10 percent reduction in capacity this winter.

Virgin Atlantic's biggest rival, British Airways, has already cut 450 managers in response to the downturn and has ruled out further large-scale job cuts for now. However, its projected operating loss of more than $213 million for the current financial year—a dramatic reversal on record pre-tax profits of $1.25 billion in 2008—underlines the difficulties facing long-haul carriers. Short-haul carriers such as Ryanair and easyJet have benefited from the financial woes of competitors this winter. However, BA and Virgin Atlantic's most lucrative source of profits, the transatlantic market, has been thrown open to greater competition by the Open Skies treaty that has liberalized the EU-US market.

The International Air Transport Association has reported a significant contraction in passenger growth in 2008. It said passenger numbers grew 1.6 percent last year, down from an increase of 7.4 percent in 2007. International passenger traffic slumped into negative territory in December, however, with a slump of 4.6 percent year-on-year.

Virgin Atlantic is hoping to relieve some of the pressure on its business by getting involved in the imminent takeover of bmi, Heathrow airport's second-largest carrier, by Germany's Lufthansa. However, it is not clear whether Sir Richard's Virgin Group is willing to dilute its 51 percent stake in the airline, and cede control of it, as part of the deal. Singapore Airlines owns the remaining 49 percent of the business.



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