Richard Branson’s Virgin Atlantic Airways Ltd. and discount carrier Ryanair Holdings Plc will cut as many as 800 jobs as the recession stifles demand for travel.
Virgin may eliminate 600 posts across its business, the Crawley, England-based company said in a statement today. Ryanair said it will scrap 200 jobs at its Dublin base, seek pay cuts from workers and remove four planes from the fleet.
Steve Ridgway, Virgin’s chief executive officer, said the airline needs to reduce headcount in order to “stay healthy” until economies revive. Ryanair counterpart Michael O’Leary blamed Ireland’s introduction of a new tourist tax from April for exacerbating the slump in demand.
Airlines worldwide are shedding jobs and routes to help combat losses that may exceed $2.5 billion this year as traffic falls 3 percent, according to the International Air Transport Association. Companies that support the industry are also suffering, with Swiss aircraft-maintenance provider SR Technics cutting 1,135 jobs as it closes its Dublin unit.
Ryanair fell 2.4 percent to 3.13 euros in the Irish capital, paring gains this year to 5.5 percent. Virgin Atlantic and Zurich-based SR Technics are closely held.
“Most airlines have been reducing capacity for some time and sooner or later that has to mean fewer staff,” said Douglas McNeill, an analyst at Blue Oar Securities in London. “While it is early days, if capacity is going to fall further there is scope for further job cuts.”
SAS Group, the owner of Scandinavian Airlines, is making the most swingeing cuts, eliminating 3,000 jobs as it cuts capacity 20 percent and abandons ambitions to operate as a global carrier after more than a year of losses.
British Airways Plc, the U.K.’s biggest airline, has cut more than 400 managers through voluntary severance and said Feb. 6 it will meet with unions to agree further reductions.
Virgin said it will consult with workers on its planned cuts and will seek to avoid compulsory firings. The carrier has already frozen pay and offered employees unpaid leave.
“This latest announcement is a real blow for the loyal and hard working crew at Virgin,” the Unite trade union said in an e-mailed statement. “Unite has major concerns for the future of the aviation industry as the downturn in passenger numbers and ever increasing competition affects the U.K.’s major airlines.”
Ryanair’s plan will affect pilots, cabin crew and engineers, the company said in a statement. O’Leary will seek pay cuts of as much as 10 percent from workers, he said at a news conference in Dublin, blaming the new 10-euro travel tax for deterring price-sensitive customers from visiting Ireland.
Additional cuts in the company’s winter schedule from the city will be announced later. Ryanair last month reduced the number of aircraft, routes and flights to and from Shannon Airport in western Ireland starting on March 30.
Ryanair had a net loss of 118.8 million euros in the fiscal third quarter ended Dec. 31 after fuel expenses rose. Still, the passenger total rose 11 percent last month from a year earlier as the recession prompted cost-conscious business people and tourists to switch to discount carriers.
SR Technics said in a statement that it’s closing the base at Dublin airport after the loss of major maintenance contracts made the business unsustainable.
The company, which employs 5,300 people, including those in Dublin, was once a unit of defunct carrier Swissair. It was later bought by private-equity firm 3i Group Plc before being sold to a United Arab Emirates-based group comprising Mubadala Development, Dubai Aerospace Enterprise and Istithmar World, according to Web site.
“We are fully aware of the difficult economic and labor market situation in Ireland and the personal implications of a closure for our staff in Dublin,” SR Technics CEO Bernd Kessler said in the statement.