Shai Weiss, Virgin Atlantic’s chief executive, is just back from a corporate strategy meeting on Necker Island, Richard Branson’s private hideaway in the Caribbean.
It is a fitting location for the airline, 51 per cent owned by Branson’s Virgin Group, which has always traded on a maverick and glamorous image.
Alongside senior bosses from US airline Delta, which owns the rest of the company, the “Necker Summit” is an annual chance to plot Virgin Atlantic’s future, and for shareholders to hold Weiss to account.
“There are formal presentations, and yes there is pressure. But forging, cementing and strengthening our partnership is not just done in a meeting room. It is also done playing [dice game] Perudo after dinner,” Weiss says. Who wins the games of dice? “Of course, Richard. He must win. But once in a while we find another person who wins.”
This year’s meeting took place shortly after last month’s day-long closure of Heathrow — where most of Virgin Atlantic’s flights start and finish — due to a power outage, and a subsequent Financial Times report that airlines could have to pay up to £1bn to improve the airport’s electricity resilience.
Still, it would have been easier than previous gatherings: Virgin Atlantic reported its first profit since 2016 days after the summit wrapped up. The financial return was modest: £20mn in profit before exceptional items. But it was still a watershed moment for a company that has punched above its weight in branding and marketing but struggled to consistently make money.
The return to profit came five years after Virgin Atlantic nearly went bust during the pandemic — after the UK government refused to offer it the same support handed to many other airlines — and three years after Weiss was diagnosed with cancer, which is now in remission. Given this back story, the chief executive does not hold back, describing a journey “from crisis to triumph”.
The 57-year-old, born and raised in Israel, has a sense of showmanship that fits with the Virgin brand. He always pairs his suits with trainers, is one of the more outspoken British chief executives and he knows the value of a good photo opportunity — including a selfie with the chief executives of BA and Heathrow at a recent industry dinner.
Weiss casts himself as someone who has always embraced a challenge. He stayed an extra year as an officer in the Israeli army during his national service, and left tech M&A banking in the early 2000s to move into managing companies because “I wanted to be a principal, not an adviser”.
He joined Branson’s Virgin Group in 2012, and the airline itself in 2014, first as chief financial officer, then chief commercial officer in 2017 before being made chief executive in 2019.
If his style is sometimes unorthodox, Weiss’s prescription for the return to profit was straight from the corporate playbook: cut costs. He says he inherited “a ferociously independent company, loved and inspiring . . . but one which needed a bit of training and trimming”.
This was supercharged by the pandemic, when he admits Virgin Atlantic came “close” to running out of money. Shareholders pumped in cash through a High Court sanctioned rescue package and Weiss cut 45 per cent of the company’s workforce — more than 4,000 jobs. He says costs at the airline have come down “across the board” and calculates £300mn in permanent annual savings.
Surely it must be particularly tough to cut staff and enforce a harder corporate edge at a company like Virgin Atlantic, which insists its people are what differentiates it from rivals such as British Airways. Weiss says staff are the “red thread” running through the business — but hundreds of cabin crew sued the airline for unfair dismissal last year, claiming age and gender discrimination. The claims were dismissed by an employment tribunal but it ruled against Virgin Atlantic on two points, including the speed at which the redundancy process for some cabin crew took place. The airline is appealing against the decision.
The business faces challenges like any other, Weiss says, but insists they are handled in the “Virgin Atlantic way”. “You take care of people, you do it by the book,” he adds.
Other difficult decisions have included killing off “loved” routes that did not pay their way, including Hong Kong and Vancouver.
Virgin Atlantic has also forged partnerships for the first time, joining the airline alliance SkyTeam to give it access to a greater pool of passengers to funnel on to its long-haul-only flights. The airline now connects 4,000 passengers a day from other flights, up fourfold from when Weiss began.
He says this is not a “turnaround” effort, it’s “a transformation”. “What’s the difference? A transformation is more enduring. It’s a fundamental change.”
A cynic might suggest that if Virgin Atlantic cannot make money now, then it never will. Almost every airline is turning a profit as passenger demand booms and a shortage of aircraft keeps ticket prices high. “And they would be right . . . we have more to do,” Weiss says.
The plan now includes repaying more of its pandemic-era debt, to cut interest rate payments and help boost profits. “Reducing leverage will allow us to invest more in our people, more in the experience,” he says.
But Weiss accepts the business will need to stay disciplined on costs. This is particularly prescient given Virgin Atlantic is among the airlines to have warned in recent weeks of early signs of a slowdown in demand for transatlantic flying from US consumers.
Staying “lean and agile and quick to make decisions, quicker to take risks” will allow Weiss to keep the pressure on BA, Virgin Atlantic’s rival since the 1980s.
The two companies are on better terms than in the early years but the competitive juices are still there. Weiss does not refer to BA by name once over a 90-minute conversation: “I can say their name I prefer not to.”
BA has wobbled since the pandemic, suffering from a string of operational problems that have dented its reputation, even as it has piled on greater profits. “They had a wobble, but it was never going to persist,” Weiss says. “They were always going to get back to being a formidable competitor.”
He says the rivalry helps Virgin Atlantic improve, and “hold a mirror up to itself”. He notes that he reads BA’s owners’ financial results one minute after they are released.
“In aviation, you need to be paranoid. Paranoia, contained and helpful paranoia, is a necessary trade for success in aviation. This is an ultra-competitive market. We make them better, and they absolutely make us better. Competition is something we thrive on. You know, we are the challenger, we are the underdog.”
Branson used to embody the competition, once rappelling off a Las Vegas casino to promote a new route. While such stunts may be in the past, the Virgin founder is still closely involved with the airline.
The meetings at Necker Island are “not always free sailing”, and Branson, a “copious note taker”, is in touch “all the time”, be it on the phone, via email or on WhatsApp, Weiss says.
“It’s the nagging little detail and the big opportunities and everything in between. Sometimes it is very intense and sometimes he has other things he is concentrating on.”
Surely Weiss’s biggest challenge, though, has been a cancer diagnosis in the spring of 2022.
“The pandemic hit us, and just as we thought that things were looking better, I was diagnosed with stage-three colon cancer.”
Weiss says he approached the diagnosis and ensuing treatment — including surgery and chemotherapy — like he has other hurdles, including business decisions.
“I was very open about it, so I shared the diagnosis with the entire company via video . . . I wanted people to know why I was not always present,” he says.
The times when Weiss was unavailable, such as during his chemotherapy, required clear communication and delegation. “There were certain days when I would absolutely say, ‘I am not in charge.’ A member of the team would assume control for all intents and purposes, always a specific person, which rotated,” he says.
He acknowledges there is “no right and wrong” way to handle such an illness. “We must understand and respect that every individual deals with it differently.”
But for him, stopping work for a long period was not an option. “My work gives me a tremendous sense of purpose and I get to do it in one of the most iconic companies, surrounded by fantastic human beings, working with amazing shareholders, competing day to day in an industry that makes a difference . . . So I wanted to get back to it.”
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