Virgin stands down 8000, cutrs 90pc of flights

Virgin will further slash domestic flights, ground Tigerair and stand down 80pc of its staff as coronavirus disrupts air travel.

Virgin has suspended the low-cost carrier Tigerair. Picture: James Gourley/AAP

Virgin Australia will be reduced to a “skeleton service” operating at just 10 per cent of domestic capacity after the latest round of cutbacks in response to the coronavirus crisis.

Chief executive Paul Scurrah announced 8000 workers would be stood down until the end of May in a move designed to preserve cash to keep the airline viable.

He said the next step could be a complete grounding of the airline if that was what the federal government required to halt the spread of COVID-19.

“We’re prepared to do that if necessary and we’re making the necessary decisions today so that we preserve cash and make sure we manage our way through this crisis,” Mr Scurrah said.

“It’s a crisis of a magnitude that the airline industry globally has not seen and the only way through it is through tough and decisive action and we have to do that.”

With domestic flights cut back from 36 to 17 destinations at a reduced frequency from Friday, 125 aircraft would be grounded at sites around the country, and low-cost carrier Tigerair would disappear from the skies, at least temporarily.

Mr Scurrah insisted the budget airline, now with a fleet of just eight aircraft and no dedicated base, would return to service the leisure market.

“The decision to suspend Tigerair was as a result of the complete drying up of any leisure demand, particularly when the state premiers and the Prime Minister have urged people not to holiday,” he said.

“In the future we will see Tigerair re-emerge and we will see a strong low cost offering in our group to take on that leisure demand as it returns.”

Throughout the crisis, talks with government were continuing with Mr Scurrah still hopeful of reaching agreement on measures that would become available to airlines as required.

“Our position is that if this goes on for as long as it possibly could go for, the airline sector as well as the tourism sector are going to need some government intervention,” he said. “I think the prudent thing to do is to make sure that the mechanisms that are delivered to help, are agreed now so when they’re needed they can be triggered easily.”

The International Air Transport Association made a further appeal for governments to assist airlines worldwide, warning the hit to revenue was likely to be more than $400bn.

IATA chief executive Alexandre de Juniac said the coronavirus crisis was proving to be the gravest threat the airline industry had ever faced.

“Without immediate government relief measures there will not be an industry left standing,” Mr de Juniac said. “Airlines need $334bn in liquidity support simply to make it through. Some governments have already stepped forward but many more need to follow suit.”

The Transport Workers Union demanded the government pay up to 80 per cent of the wages of Virgin Australia employees while they were stood down.

National secretary Michael Kaine said it was disappointing to see “another significant employer in Australia standing workers down and forcing them to shoulder the burden by taking their leave”.

“The government is standing by while workers are taking the hit instead of guaranteeing part of their wages and ensuring that when the crisis abates they will not be drastically worse off,” said Mr Kaine.

Virgin Australia’s share price has sunk to a historic low of 5c and Moody’s has downgraded the airline’s credit rating from B2 to B3.

The share price climbed after Mr Scurrah’s announcement on Wednesday, closing up 14.5 per cent at 7.1c.