Coronavirus Qld: Virgin Australia boss comfortable with airline’s position

In the wake of Qantas’ decision to slash services, Virgin Australia has made a bold claim about its capacity to continue servicing customers.

THE boss of Virgin Australia has insisted the Queensland-based carrier has the financial muscle to weather the massive downturn in domestic travel expected from the coronavirus outbreak.

After rival Qantas yesterday unveiled dramatic cuts to its international and domestic flight schedule, Virgin chief executive Paul Scurrah said the airline was well placed to serve Australian travellers.

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“We remain comfortable with our financial position,” he told The Courier-Mail.

“The facts are we have approximately $1 billion in cash, no new debt maturities and no new aircraft orders.

“There remains a level of domestic passenger traffic and we are managing loads sensibly.”

Qantas’ decision to slash 90 per cent of international flights and 60 per cent of its domestic capacity until at least the start of June will effectively ground 150 aircraft.

The announcement, which follows similar cuts by other international carriers, caused airlines stocks to plummet with Virgin shares dropping to just 7 cents yesterday.

Aviation sector insiders believe Qantas’s move was brinkmanship and aimed at imperilling the financial status of smaller domestic rivals.

It prompted the Transport Workers’ Union and the Australian Services Union to demand the Federal Government urgently intervene to save jobs in aviation.

“The focus of assistance and support to the industry must be on protecting the jobs of workers not simply propping up companies,” a joint letter from the unions said.

Virgin Australia CEO Paul Scurrah

Virgin has an estimated 4500 jobs in Queensland after being lured to set up in the Sunshine State with tax incentives by former premier Peter Beattie.

Aviation expert Geoffrey Thomas said he was confident Virgin was well placed to survive, but stressed the need for intervention to retain a “strong duopoly” should the airline strike trouble.

“No one is served by having just one domestic carrier,” he said.

Mr Scurrah said Virgin was still assessing the impact of sweeping travel restrictions on the company.

“We need to provide the most appropriate response and we expect to update our customers and our people within the coming days,” he said.

S&P Global Ratings yesterday downgraded Virgin Australia’s credit rating (from B to B minus) amid revenue concerns.

Virgin’s large cash reserves and investments, worth about $900 million, will provide a temporary buffer to the crisis, but S&P acknowledges the company’s future stability may rely on it cutting more costs if this crisis continues beyond the next few months.