Virgin Australia records a loss and reveals Tigerair will be trimmed
Tigerair’s fleet will be reduced and operations cut as Virgin Australia Group records a $99m loss. It has predicted more losses in the next few months due to the coronavirus.
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TIGERAIR will close its Brisbane base and dramatically slash its operations as Virgin Australia continues to cut costs following a $99.9 million loss in the first half of the year.
Virgin Australia Group chief executive officer Paul Scurrah told staff this morning network capacity would be reduced by 3 per cent in the next four months and five of Tigerair’s loss-making routes would be cut.
The jobs of Tigerair pilots and cabin crew members will be on the chopping block as Virgin Australia Group moves to close its Brisbane and Sydney bases.
The bases are operational rooms at Brisbane and Sydney airports used by working pilots and crew.
Virgin Australia Group has not revealed how many Tigerair jobs will be lost, but say they are in addition to the 750 losses which were announced in August last year and are due to be finalised by December 31.
The company says the reduced capacity of the Tigerair fleet, from 14 aircraft to eight, is the cause of the new cuts.
“We are exploring a range of measures to mitigate the impacts of this proposal,” a Virgin Australia spokesman said.
“Those options will include voluntary redundancy, leave without pay and potential redeployment across the Virgin Australia Group.”
“Unfortunately a number of our team members will be impacted as a result and we have commenced formal consultation with pilot and cabin crew representatives,” he said.
How many staff will be affected and what operations will change is not yet known.
Australia’s second largest carrier announced today a statutory loss of $99.9 million for the first half of this financial year, a blowout from a $55 million loss for the same period one year ago.
A 1.5 per cent revenue increase to $3.1 billion was not enough to offset higher fuel costs, labour agreements and leasing costs.
The company has also blamed the loss on one-off costs associated with the purchase of the remaining stake in the Velocity Frequent Flyer business.
Despite the result the number of passengers travelling with Virgin Australia Group increased 2.1 per cent.
To trim costs, the company also announced it would remove seven A320 aircraft from Tigerair by October and transfer two Boeing 737s into the budget carrier, reducing Tigerair’s fleet from 14 to eight aircraft.
Tigerair’s Sydney to Cairns route will be cut from April 27 and its Hobart to Gold Coast flight will end one day later.
Virgin has assured Queensland’s Tourism Minister Kate Jones its Virgin-branded Sydney to Cairns route.
The company will also temporarily reduce capacity on some routes as demand drops due to the coronavirus.
Virgin predicts coronavirus will cost the company $55 million in domestic earnings and $20 million on its international routes in the second half of the financial year.
About 400 of the 750 job cuts announced by Virgin in August last year are due to be completed by March 31, with the remaining on track by the financial year end.
A withdrawal from all Hong Kong flying will occur by March 2020.
Mr Scurrah told staff was “more work to do on our financial performance, but we have a very clear pathway to do so”.
Queensland Transport Workers Union branch secretary Peter Biagini said the reduction spelled a “loss of competition” and opportunities in the sector
“It’s terrible for people losing their jobs,” he said.
Mr Biagini held airport corporations responsible for the “many things” causing problems in the aviation industry while they recorded millions of dollars in profit.
The TWU, which will next month start negotiations with Virgin Australia on a new enterprise agreement, tipped the coronavirus and sluggish economy would create a downturn for months to come.
“It’s going to be a downturn in the industry and the people that are going to suffer are the workers,” he said.
“We’re all hanging on to our seats.”
Mr Biagini said it was “appalling” airport and airline executives maintained their high remuneration while “everyone under has to suffer”.
Originally published as Virgin Australia records a loss and reveals Tigerair will be trimmed
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