Virgin Australia to kill 3000 jobs and Tigerair
Virgin Australia will cut at least a third of its workforce and kill off its Tigerair brand in an effort to resurrect the failed airline.
Virgin Australia will cut at least a third of its workforce and kill off its Tigerair brand in an effort to resurrect the failed airline, which collapsed in April owing $6.8bn.
But Virgin, which is being acquired by private equity giant Bain Capital, will restart international flights and keep open its network of business lounges, the airline’s chief executive Paul Scurrah said.
Most controversially, however, Virgin will appoint former Jetstar chief Jayne Hrdlicka to its board, a move which will be opposed by powerful transport unions.
Ms Hrdlicka, who has been advising Bain on its bid for the airline, is also in the running to take over as the company’s chairwoman. A Virgin spokeswoman said that Ms Hrdlicka would “add great value … on the board”.
But Michael Kaine, national secretary of the Transport Workers Union, told The Australian Ms Hrdlicka’s leadership “doesn’t engender a lot of trust”.
“In particular, some of the activities and actions at Jetstar and of course with Alan Joyce in relation to the shutdown (of Qantas in 2011) and the discussions that led to pay freezes for Qantas staff, some of which have never been paid back,” Mr Kaine said.
“What Virgin needs is a board that can really bring people together and work collaboratively.”
Virgin’s relaunch plans — as flagged by The Australian on Tuesday — will include simplifying its fleet to a single aircraft type, Boeing 737s, and reviewing its regional operations.
Mr Scurrah, who will remain as chief executive under Bain, said the recovery following the coronavirus pandemic would be slower than first thought.
“Domestic and short-haul may take three years to fully recover, with a very real chance it could be longer,” he said. “In this environment, all airlines will look very different to how they do now.’’
The airline expects to begin flying to New Zealand, Fiji, Tokyo and Los Angeles again once international flights restrictions are lifted.
Virgin will also honour all existing travel credits and Velocity Frequent Flyer points that were accrued before its collapse.
The COVID-19 pandemic forced the company into voluntary administration in April after the federal government ruled out a rescue package.
In late June, Bain’s private equity rival Cyrus Capital withdrew its bid for the airline. Other interested parties had included local investment firm BGH Capital and American outfit Indigo Partners.
In an email to employees, Virgin executive Dayna Field indicated most of the 3000 job losses would come from Tigerair and the long-haul international arm.
That will push those workers off JobKeeper and onto JobSeeker, a lower payment.
The email outlined the next steps, including a list of entitlements for those leaving the airline — such as unlimited standby travel with Virgin for two years.
Mr Scurrah said he could not guarantee the job cuts would be capped at 3000, due to the uncertain nature of the extent of the pandemic and border closures.
Virgin would have about 6000 staff once the market recovered, the airline said on Wednesday.
Deputy Prime Minister Michael McCormack said that airlines have had to “make structural adjustments to ensure they can survive and ultimately thrive in the long term”.
“The government is confident the current market-led solution will see Virgin Australia emerge in the best position possible,” Mr McCormack said.
ACTU national president Michele O’Neil said the job losses were devastating and the federal government was largely to blame.
“Other countries’ governments have chosen to support their aviation industries but this government has chosen to turn their backs on aviation workers in the middle of the worst recession we have seen since the Great Depression,” Ms O’Neil said.
A Bain spokesman said discussions were continuing with the Queensland government on a $200m investment designed to retain Virgin’s headquarters and the lion’s share of jobs in the state.
Without that investment, the airline would likely have relocated to NSW or Victoria, he said.
Additional reporting: Sarah Elks
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