Virgin Australia will cut 3,000 jobs – about a third of its workforce – and scrap its budget carrier Tigerair as the airline struggles to survive the coronavirus pandemic.
The airline on Wednesday announced their ‘plan for a stronger, more profitable and competitive business’ coming out of voluntary administration, under the ownership of Bain Capital.
Virgin Australia will move to an all-Boeing 737 mainline fleet for domestic operations and international flight routes will continue to be suspended amid bans on overseas travel.
Tigerair will be discontinued as ‘there is not sufficient customer demand’ to support two airlines in the market but Tigerair Australia’s Air Operator Certificate (AOC) will be retained in the hope the low-cost carrier can return to the skies when the domestic market supports it.
Virgin Australia has revealed it will cut 3,000 jobs amid the coronavirus pandemic
About 3,000 workers – primarily in operations and corporate roles – will be impacted by the airline’s announcement and voluntary redundancy, redeployment, leave without pay and flexible work arrangements are being explored.
Virgin Australia said the changes will secure the employment of 6,000 workers, with the opportunity to expand the workforce to 8,000 when market demand recovers.
All travel credits and Velocity Frequent Flyer points will be carried forward under the ownership of Bain Capital.
Virgin Australia Group CEO and Managing Director Paul Scurrah said demand for domestic and short-haul international travel is likely to take at least three years to return to pre-COVID-19 levels.
‘Our aviation and tourism sectors face continued uncertainty in the face of COVID-19 with many Australian airports recording passenger numbers less than three per cent of last year and ongoing changes to government travel restrictions,’ he said.
Tigerair will be discontinued as ‘there is not sufficient customer demand’ to support two airlines in the market. Pictured: Jetstar, Virgin and Tigerair aircraft are seen at Tullamarine Airport in Melbourne on July 7
Mr Scurrah said the business needed to make changes to ensure Virgin Australia Group would be successful in this ‘new world’.
‘In a country as big as Australia, strong competitive airlines are critical in helping restore the economy, which is why in the face of the worst crisis our industry has ever seen, a well-capitalised Virgin Australia Group with a solid and sustainable future is a great outcome for Australians and the nation’s economy,’ he said.
The group has been struggling under billions of dollars worth of debt and the impact of the pandemic on the passenger jet market, which has led to the near-collapse of international travel and a huge slump in domestic markets.
When it was forced into voluntary administration in April, the airline’s woes attracted a pack of private equity firms and other parties keen to acquire the airline before Bain Capital came out on top.
While the binding sale agreement with Virgin’s administrators is still to be ticked off by creditors, it’s expected to be completed in coming weeks.
More to come
Source: Daily Mail AU