Virgin Australia cuts 3000 jobs and axes Tigerair airline

Virgin Australia will shed about one-third of its workforce, kill off Tigerair and suspend long-haul international routes as rebrands as a “value airline”.

Virgin Australia will shed about 3000 jobs and cull Tigerair Australia as it rebrands as a “value airline” with a focus on domestic and short-haul international flights, it announced this morning.

The job cuts affect about one third of the Brisbane-based airline’s workforce across cabin crew, ground crew, engineers, baggage handlers and some international head office staff. The cuts will mostly be felt in its international network.

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The airline will also suspend all long-haul international flights and transition to a single Boeing 737 fleet for domestic and short-haul international travel.

Virgin Australia will cut about 3000 jobs, or about one-third of its workforce, as it shifts its focus to domestic and short-haul international flights. Picture: NCA NewsWire/Tertius Pickard

Economy and business classes will remain, but Virgin Australia’s lounges will remain closed for the foreseeable future due to a lack of demand during the pandemic.

The announcements were made this morning as Virgin Australia unveiled its plan to re-emerge from the brink of collapse in the midst of the COVID-19 pandemic.

“Demand for domestic and short-haul international travel is likely to take at least three years to return to pre-COVID-19 levels, with the real chance it could be longer, which means as a business we must make changes to ensure the Virgin Australia Group is successful in this new world,” chief executive Paul Scurrah said today.

“Our initial focus will be on investing in the core Virgin Australia domestic and short-haul international operation alongside our 10-million-member strong Velocity Frequent Flyer program, continuing to offer an extensive network of destinations, a domestic lounge network and value for money for customers.”

American private equity firm Bain Capital agreed to buy Virgin Australia in June, and creditors will vote on Bain’s proposal later this month.

The airline has unveiled its plan to rebuild after the administration process.

Mr Scurrah said the decision to cull 3000 workers was “very tough” but the airline hoped to re-employ lost staff once it was stronger.

“Our intention is to secure approximately 6000 jobs when the market recovers with aspirations for up to 8000 in the future,” he said.

“To those that leave the business, I want to thank them for the role they’ve played in making this a great airline.”

Mr Scurrah said the axed staff would have all their entitlements honoured and be given a two-year extension of employee travel benefits and early access to retiree and long service benefits. Voluntary redundancies will be offered.

About 9000 jobs with the airline have been hanging in the balance after it went into voluntary administration in April with a debt pile of close to $7 billion.

Virgin Australia CEO Paul Scurrah, left, and Deloitte administrator Vaughan Strawbridge. Picture: John Feder

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The airline’s move to a single Boeing 737 fleet means it will ditch its ATR, Boeing 777, Airbus A330 and A320 aircraft.

Short-haul overseas destinations such as New Zealand and Bali are likely to make a comeback when international borders re-open, but long-haul services, such as to the United States and China, are expected to suspended indefinitely.

“When (there is) the opportunity for us to fly back to Los Angeles, or take up what we were once excited about, flying to Tokyo, then we will see something very positive,” Mr Scurrah said.

In the meantime, the new-look Virgin Australia would have an “extensive” domestic market, serving about 40 ports with at least 75 city pairs.

“It will cover the country,” Mr Scurrah said. “There will be high-frequency flights.”

Virgin Australia will also continue its commitment to regional flights, serving 18 top regional centres with its 737 fleet.

Mr Scurrah said as business and leisure travel picked up, customers would see competitive prices from Virgin even though it would not become a low-cost carrier.

“We had to opportunity to reset some of the onerous costs we had on us, which gives us the opportunity to significantly lower that cost base without bringing the product down-market. We’re not doing that,” he said.

Virgin Australia also confirmed travel credits and Velocity points would be carried forward under its new ownership. Travel credits will be honoured until June 2023.

Today’s announcement spells the end of Tigerair Australia, Virgin’s low-cost subsidiary, which has been entirely grounded during the pandemic.

Virgin said there was “not sufficient customer demand to support two brands at this time”.

However, it said it would retain Tigerair’s Air Operator Certificate so there was the option of reviving it in the future “when the domestic market can support it”.