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Money News

Virgin Atlantic says it can survive worsening travel outlook

LONDON (Reuters) - Virgin Atlantic’s 1.2 billion pound ($1.6 billion) rescue deal two months ago means the airline can survive even if the travel situation worsens, its chief executive told an airline industry event on Wednesday.

Virgin Atlantic's planes are seen parked at Manchester Airport, following the outbreak of the coronavirus disease (COVID-19), Manchester, Britain, May 9, 2020. REUTERS/Phil Noble/Files

International travel remains at very low levels and a surge of coronavirus cases in the last two months has prompted further restrictions, dealing Virgin a new blow just after it stabilised its financial position in September.

A new lockdown in England and accompanying travel ban added to Virgin’s difficulties in its main UK to North America market, where a U.S. bar on most arrivals from the UK and Europe is still in place.

CEO Shai Weiss said Virgin would survive and that its downside case was for normalised UK to U.S. travel to resume next spring.

“The recapitalisation, with the support of our shareholders and new investors and everything that I’ve mentioned, should see us through, even under more strenuous positions,” he told an online conference.

Virgin has cut costs by 335 million pounds this year, Weiss said. It has announced 4,650 job losses during the pandemic, halving its workforce, and shrunk its fleet.

Weiss called on the UK government to change its rules quickly so that passenger testing shortens a 14-day quarantine required for arrivals from most countries. The government has said it is making progress with the plan.

“The time to act is now,” Weiss said, adding he also wanted the United States and the UK to agree a “travel corridor” to allow quarantine-free travel between them.

In contrast to the last UK lockdown when Virgin did not fly for 90 days, Virgin Atlantic has continued to fly in the current lockdown, with some trimming of its schedule, Weiss said, adding that by the end of 2020, it would be flying about 25% of last year’s capacity.

($1 = 0.7540 pounds)

Reporting by Sarah Young; editing by Michael Holden and Nick Tattersall

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