Virgin Australia will sack 3000 employees, or about a third of its workforce, retire its budget Tigerair brand and offload its long-haul international jets as part of a re-launch under its new owner Bain Capital.
Australia's number two airline, which went into voluntary administration in April owing $6.8 billion, said the relaunch plan announced on Wednesday morning would make it a "stronger, more profitable and competitive" carrier in the post COVID-19 world.
Virgin's new owners said the plans would make it a "stronger, more profitable and competitive" carrier.Credit:James Alcock
A key part of the overhaul is stripping Virgin's fleet back to just its Boeing 737s for domestic and international short-haul flights, and its Fokker 100s and Airbus A320s for regional and charter services. Virgin's long-haul Boeing 777s and Airbus A330s, Tigerair's A320 and regional ATR turboprops will all go.
Virgin will retire its budget Tigerair brand but will maintain its air operating certificate so it has the option of relaunching a new ultra-low cost arm in the future.
Virgin said it would not turn back into a budget airline but would be “the best value carrier in the market”, with business class products and lounges in key domestic airports.
The airline said it will maintain an “extensive” domestic network, with frequent flights between capital cities and flights to holiday destinations and regional centres, as well as a short-haul international network, to New Zealand and possibly Bali and the Pacific Islands.
Even when we do see a return to pre-COVID-19 levels of travel, successful airlines will be influenced by demand and look very different than the way they did previously.
Virgin Australia CEO Paul Scurrah
While long-haul international flying was an "important part" of the airline's future, services to Los Angeles and Tokyo will remain suspended until global travel demand recovers from the COVID-19 pandemic, Virgin said. Customers will still be able to book international flights with code share partners.
Virgin chief executive officer Paul Scurrah said domestic and short-haul international travel demand was likely to take at least three years to recover from the pandemic, meaning the airline had to change to be successful.
“Even when we do see a return to pre-COVID-19 levels of travel, successful airlines will be influenced by demand and look very different than the way they did previously," he said.
Mr Scurrah said Virgin intended to secure around 6000 jobs but had aspirations for up to 8000 in the future as the market recovers.
"To those that leave the business, I want to thank them for the role they’ve played in making this a great airline," he said.
Virgin confirmed it will honour travel vouchers issued to customers for flights cancelled due to COVID-19.
Australian Council of Trade Unions president Michele O’Neil said the loss of 3000 highly skilled aviation workers was devastating at a time when so many people were already struggling.
However, she said the relaunch plan included “important elements that unions have argued are critical to save the maximum number of jobs coming out of the pandemic and ensure there remains two viable national airlines in Australia”.
Virgin's administrator Deloitte signed a deal to sell the airline to US private equity giant Bain in June, but key terms of the deal have been kept secret, including how large the business will be and how much will be paid to unsecured creditors.
More to come
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2020-08-04 23:50:00Z
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