Virgin Australia grounds international flights amid coronavirus crisis

In an unprecedented move, Virgin Australia will ground its entire international fleet in response to the coronavirus crisis.

Virgin Australia will suspend all international flights and make deeper cuts to domestic capacity as travel demand plummets amid the coronavirus outbreak.

The airline on Wednesday said it will suspend all international flying for two and a half months from March 30 to June 14 and is also set to reduce domestic capacity across Virgin and Tigerair by 50 per cent in response to government- imposed travel restrictions announced at the weekend.

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International travellers to Australia are now required to self-isolate for 14 days upon arrival.

Virgin’s new measures are the equivalent of grounding 53 aircraft and follow already-announced service reductions on Friday.

The airline said it would aim to avoid staff redundancies “wherever possible” by fast-tracking measures such as accrued leave, leave without pay, and redeployment.

Virgin’s cuts follow a federal government announcement that Australia’s airlines will be handed a $715 million lifeline to help the sector through the coronavirus pandemic.

The airline has already reduced executives’ fees as it joins rivals in attempting to soften the impact of the coronavirus spread.

Qantas on Tuesday flagged an impending 90 per cent reduction in international flights and 60 per cent reduction in domestic capacity.

Air New Zealand will also cut 13 routes to Australia and will run just 20 per cent of regular trans-Tasman capacity.

It will take off from Wellington and Christchurch for Australia just twice a week, to Sydney, and is not ruling out further cuts.

Regional carrier Rex, meanwhile, entered a trading halt on Tuesday pending an announcement to the market.

“We have entered an unprecedented time in the global aviation industry, which has required us to take significant action to responsibly manage our business while balancing traveller demands and supporting the wellbeing of Australians,” Virgin managing director Paul Scurrah said in a release to the ASX.

The airline had already suspended full-year earnings guidance as it flagged reductions in its Los Angeles, Japan, and trans-Tasman services, as well as announcing the exit of Auckland services to and from Tonga and the Cook Islands.

Virgin’s Melbourne to Los Angeles services will be suspended from March 20 while the inaugural Brisbane to Tokyo, and Melbourne to Denpasar services will be postponed from March 29.

The company said it and budget operation Tiger will operate a reduced international schedule between now and March 29 to enable Australians to return home and visitors to return to their point of origin.

Shares in the airline hit an all-time low of 5.0 cents last week, having shed about two thirds of their value since they were worth 14.5 cents at the start of February.

The company posted a wider $88.6 million net loss in the first half of FY20 after buying all of its Velocity Frequent Flyer program, writing off assets and workforce reductions.

Virgin shares were worth 6.3 cents at Tuesday’s close.

The federal government announced on Tuesday it will forgo fuel excise, air service charges and regional security fees in a move expected to create an up front benefit of $159 million to Australia’s air industry, with the government refunding charges paid since February 1.