Virgin Atlantic rescue approved but airlines continue to feel the heat 

Virgin Atlantic has won approval for a €1.3bn rescue package which could see it survive the Covid crisis

Virgin Atlantic’s chances of surviving the carnage wreaked on the airline industry by the Covid-19 travel shutdown have improved, thanks to its lenders giving the green-light to a £1.2bn (€1.3bn) rescue package and debt restructuring.

“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 airline said.

Virgin Atlantic was plunged into crisis after the coronavirus pandemic grounded flights and Britain ruled that it didn’t qualify for state aid from a multi-billion pound bailout fund. 

The carrier embarked on a search for a private backer, settling on financing from hedge fund Davidson Kempner Capital Management, along with a contribution from founder Richard Branson.

Elsewhere, the negative impact from the pandemic continues to be felt across the airline industry.

SAS – Scandinavian Airlines – said it swung to a deep loss in its third-quarter as heavy cost cuts failed to offset the collapse in air travel caused by Covid-19. The airline is fighting to secure a cash injection from main owners Sweden and Denmark.

American Airlines said it will cut 19,000 workers, capping a 30% workforce reduction since the coronavirus pandemic began to torpedo travel demand. About 17,500 employees will be furloughed, meaning they are eligible to be called back when conditions improve, while 1,500 previously announced cuts to management staff will take effect.

Meanwhile, Middle East airlines Emirates and Etihad Airways have again asked cabin crew to take voluntary unpaid leave as they try to manage the impact from the pandemic. Finnish national carrier Finnair plans to cut up to 1,000 jobs, or about 15% of its workforce, and seek further savings across its operations.

And, Qantas has announced plans to cut up to 2,500 more jobs by outsourcing its Australian ground handling operations to lower costs as it braces for a €6bn revenue hit due to the pandemic this financial year.

Hungary’s Wizz Air warned its industry-leading recovery could stall as Covid warnings and restrictions hamper travel across Europe, but said Britain’s quarantine rules had not led it reconsider long-term expansion plans there.

- additional reporting Bloomberg and Reuters