Virgin Australia to cut hundreds of jobs after seven years of losses

VIRGIN Australia will cut 750 jobs and review routes as the struggling airline posted its seventh consecutive year of losses.

VIRGIN Australia will cut 750 jobs and review each of its routes as the struggling airline posted its seventh consecutive year of losses.

Soft demand, high fuel costs and currency movements have resulted in a $315 million full-year loss for the airline, it announced this morning.

While the loss is down from $653.3 million the previous year, Virgin Australia chief executive Paul Scurrah said the results underscored the need for change.

The company will cut 750 roles from corporate and head office over the next 12 months in a move expected to deliver $75 million each year in savings.

Mr Scurrah said some of the roles targeted had already been identified.

“In the coming weeks those people will be informed,” he said.

A Virgin Australia worker said staff had braced for cuts when Mr Scurrah arrived at the company in March.

The employee said anxious staff in the Brisbane headquarters found out about the losses through a “vague” email and video message yesterday morning.

Virgin Australia is headquartered at Bowen Hills and, as revealed by the Courier Mail last week, has started the long-term process to find a new office.

The company would not reveal how many jobs would be lost in Brisbane, which has a workforce of about 1000 people.

The cuts will represent a 30 per cent reduction in the corporate and head office workforce.

Virgin Australia staff were sent an email this morning notifying them of the company’s plans.

Corporate roles, from general manager to entry-level positions, will be targeted.

Paul Scurrah, Virgin Australia CEO, said it was a tough year for the airline. Pic: Britta Campion / The Australian

Mr Scurrah said the business “needed to make some tough decisions”.

Virgin has posted seven consecutive years of losses totalling $1.9 billion.

The company will review the feasibility of each of its routes and future fleet requirements.

This morning’s announcement has concerned Queensland Tourism Minister Kate Jones.

“Obviously the new CEO of Virgin has a job to do but it’s always disappointing to hear of any job losses particularly in the aviation industry here in Queensland,” she said.

“I’m happy to sit down with the Virgin CEO and really understand what impact that means for Brisbane.

“As a government we have more money than ever before available to secure new flights to Queensland.”

Ms Jones said she did not want to see the loss of flights in and out of Queensland.

“We know that by having direct flights, that you can actually increase visitation which means more tourism jobs,” she said.

“I will undertake to meet with the Virgin company to talk through the impacts for Queensland and certainly our view would be that we would not want to see any loss of direct flights into Queensland because we know they’re critical to the tourism industry.”

Virgin located its headquarters in Brisbane in early 2000 after securing payroll tax relief and tourism marketing assistance under a five-year, $10million deal with the Queensland government.

Then premier Peter Beattie on Wednesday refused to be drawn on whether any government assistance should be offered to keep Virgin jobs in Queensland.

“It’s a very competitive and ugly world out there but I would hope that as many jobs as possible would stay in Brisbane along with the headquarters,” Mr Beattie said.

“I’m optimistic they can turn the corner, they’re a good airline.”

Tourism Minister Kate Jones fears Virgin Australia’s decision will have a negative effect on Queensland’s tourism industry. Pic: AAP/Megan Slade

The Australian Services Union fears many of Virgin Australia’s job losses will come from its Bowen Hills office.

“We think it’s going to have significant impacts with the staff in Brisbane,” Together branch director Michael Thomas said.

“They’re understandably shocked.

“There’s been no warning that such drastic action was being considered.”

Mr Thomas said the union was eager to meet with Virgin management to discuss the specifics of the losses.

“Virgin is saying at this point they’re going through the process of identifying the detail and that concerns us,” he said.

“Given the head office is here in Brisbane, without any information to the contrary we’ve got to be concerned the jobs are going to be here.”

Virgin Australia’s low-cost carrier, Tigerair, also struggled with declining revenue and accelerated depreciation costs leading to an underlying EBIT loss of $45 million.

Tigerair is transitioning its fleet from A320 aircraft to B737s.

The company’s sixth Boeing 737 plane is due to arrive in October.

Virgin Australia’s loss comes as rival Qantas continues to post a profit amid difficult conditions.

Last week the flying kangaroo recorded a $1.3 billion underlying profit before tax for the year, down from a record $1.56 billion for 2018.

The company blamed high fuel costs for the moderate fall in profits.

Airline chief executive Alan Joyce said despite the headwinds Qantas remained “one of the best-performing airline groups in the world”.