Virgin Group, led by Sir Richard Branson, has decided to make a series of job cuts in their airline, Virgin Atlantic, in an effort to create a more efficient business structure, BBC has learned.
The said cuts will result in the termination of 500 jobs, some of whom are managerial while the others are support. Moreover, the job cuts will reportedly be done through re-deployment as well as redundancies.
In addition, Virgin has also informed BBC that the coming job cuts will not affect any of its frontline staff who directly deals with customers on a daily people. Virgin Atlantic CEO Craig Kreeger tells the BBC, “As a people-oriented business, these are extremely tough decisions to take, but we know they are necessary.” To date, there are as much as 9,000 people working for the airline.
The first quarter of 2015 seemed to have gone well for Virgin America as it reported that it experienced a “tenth consecutive quarter of year-over-year improvement in profitability.” It achieved a total operating revenue of $326.4 million, which reflects a 4.1% increase compared to the first quarter operating revenue of 2014. Moreover, its revenue per available seat mile – defined as “passenger revenue per available seat mile” – has also increased by 2.6%, bringing it to 10.27 cents. Consequently, Virgin’s cost per available seat mile was only 11.11 cents, decreasing by 5.5%.
At the same time, Virgin America’s fleet has also proved to be more fuel-efficient as it reported a lower average economic fuel cost per gallon for the first quarter of the year. The said cost was averaged at $2.45, reflecting a decrease by 22.7% year-over-year. Meanwhile, the best news for Virgin America is actually their first quarter net income, which amounted to $10.5 million.
In its operational results for May 2015, Virgin America has reported that it had experienced an increase in onboard passengers by 4.2%. This is in comparison to their number of onboard passengers during May 2014. Meanwhile, the airline’s traffic – revenue passenger miles – experienced a slight decrease of 0.3% during the month of May with only 898,982 compared to May 2014’s airline traffic of 901,267.
Virgin Atlantic believes that the coming job cuts will be hard but necessary in order for the airline to achieve its goals. As Kreeger told BBC, “To truly position Virgin Atlantic for long-term and sustained success, we need to be a more efficient and agile organisation that has the ability to invest even more in the areas that make Virgin Atlantic’s customer experience unique.”
One recent investment Virgin Atlantic has reportedly made last year was a £300 million programme that aims to install wi-fi in all of Virgin Atlantic’s fleet by the end of 2016.
Furthermore, in a copy of Virgin America’s presentation at the Wolfe Research 8th Annual Global Transportation Conference last May 18 that was obtained by Morning News USA, the company has stated that “Virgin America outsources functions that are not passenger-facing to reduce costs.”
Moreover, such outsourced functions include ground handling, heavy maintenance, call center, catering, fuel procurement and aircraft parts management.