Virgin Australia backs itself as Moody’s backs Qantas

Virgin Australia is ramping up its domestic flights to match Qantas despite ongoing uncertainty over its financial position.

Qantas, Jetstar and Virgin aircraft mothballed at Avalon Airport, Geelong during the COVID-19 shutdown. Picture: Alan Barber

Virgin Australia is ramping up its domestic flights to match Qantas despite ongoing uncertainty over its financial position.

The bold move comes as a new report from credit ratings agency Moody’s predicted Qantas would be among the first airlines worldwide to recover from the COVID-19 crisis because its main competitor was in administration.

By early next month, Virgin Australia will add about 30,000 seats across 320 flights doubling its current schedule.

The move comes despite concerns about the airline’s cash reserves, after going into administration on April 21 with debts of $6.8bn.

Virgin Australia group chief commercial officer John MacLeod said the services would be a welcome boost to tourism and the economy.

“The services will also give us the opportunity to bring team members back to work who I know have been looking forward to welcoming and sharing our award-winning customer service,” Mr MacLeod said.

Coinciding with the increase in flights, would be an overhaul of procedures to ensure the health and wellbeing of passengers and crew.

These would include passengers being required to fill out a health questionnaire on check-in to ensure they were fit to fly and to assist with contract tracing.

Passengers were encouraged to bring their own masks and sanitiser, which would also be available on board aircraft.

Group medical officer Dr Sara Souter said the airline would adopt contactless check-in, a new sequenced boarding and disembarkation process and more frequent cleaning of high-touch services on the aircraft and within the airport.

Contactless check-in

“Wherever possible, we will try to do our best to keep an empty seat between guests travelling alone, however this may not always be available,” Dr Souter said.

“Everyone has a role to play, which is why we are asking guests to be mindful of their own personal protection.”

The Virgin announcement coincided with a new report from Moody’s predicting Qantas would rebound fairly quickly from the global health pandemic.

The prediction was based on Australia’s success in controlling the coronavirus outbreak; flying being the only viable means of transport between most cities and Qantas’s high proportion of domestic earnings.

“In addition the resumption of quarantine-free flights between Australia and New Zealand and Virgin Australia entering voluntary administration will support Qantas’s recovery,” said the report.

Moody’s vice president and senior credit officer Ian Chitterer said they were not expecting global air passenger demand to fully recover until 2023, but thought Qantas’s warnings and credit quality would rebound sooner than many of its global peers.

He said with Qantas earning around 80 per cent of its revenue from its domestic flights and loyalty program, the gradual resumption of flying within Australia should support a rapid recovery for the airline.

Virgin Australia administrators Deloitte hope to finalise a sale of the carrier to either Bain or Cyrus Capital by the end of the month, to cement the company’s future.

Both parties in the running have strong aviation credentials, with ex-Virgin America CEO Jonathon Peachey leading the campaign for Cyrus and former Jetstar CEO Jayne Hrdlicka steering Bain’s bid.