Yahoo Finance Virgin Atlantic flies closer to safety as American cuts 19,000 jobs
Virgin Atlantic creditors have backed its £1.2bn rescue as transatlantic rival American Airlines raised the spectre of cutting 19,000 jobs as a result of coronavirus.
Sir Richard Branson’s airline said securing support from creditors marks a “significant milestone” to shore up its finances that have been devastated by the pandemic.
Under the plan, announced in July, some £400m will be injected into the airline - half coming from Sir Richard’s Virgin Group.
Other investors and creditors will defer payment worth hundreds of millions of pounds.
A spokesman for the airline said: “Achieving this milestone puts Virgin Atlantic in a position to rebuild its balance sheet, restore customer confidence and welcome passengers back to the skies as soon as they are ready to travel.”
The news contrasted sharply with an announcement from American Airlines, which prior to the pandemic was the world’s biggest carrier.
After the US Government's bankrolling of wages ends on October 1, American said that 17,500 staff will be made temporarily redundant, meaning that they will be eligible to return when conditions improve.
A further 1,500 American Airlines management positions will be cut.
“We have come to you many times throughout the pandemic, often with sobering updates on a world none of us could have imagined,” chief executive Doug Parker and president Robert Isom told employees. “Today is the hardest message we have had to share.”
Meanwhile, Emirates and Etihad have asked cabin crew to take voluntary unpaid leave as the airlines navigate the impact of Covid-19 on air travel.
Staff can take up to three months off between September 1 and November 30, according to internal memos seen by Reuters.
Virgin Atlantic will now hope to complete its rescue next week.
While the creditor backing had been widely expected, the prospect of finalising its restructuring - one that will require more than 3,000 jobs to be cut - will draw a line under months of uncertainty over the airline’s future.
The Government rejected a request by Virgin Atlantic to inject £500m of taxpayer cash into the business.
