MIAMI — Virgin Australia will cut 750 jobs amid poor financial results that were recently unveiled to the press. The carrier plans to slash corporate roles by A$75 million a year as it is aiming to recover from a loss of A$349 million for the full year.
The group was able to reduce these losses having previously been recorded at A$681 million in 2018. Still, losses in different areas of the business are continuing to rise, raising red flags all over the airline’s headquarters.
Virgin Australia mentioned that A$159 million of the loss was attributed to a weaker Australian dollar and rising fuel costs. The airline has had to cut 7% of its total workforce.
Virgin Australia CEO, Paul Scurrah, mentioned to the local media outlet, ABC News, that routes will also have to be cut on top of the corporate jobs.
“We intend to further reduce flying across elements of our short-haul international and our domestic network to match our strategic positioning and the market conditions as well as to maximize route profitability,” he said.
“This may involve potential withdrawals from certain markets which are uneconomical for us, however, we will be reviewing all routes in detail.”
This comment was made even in the wake of domestic revenues for the carrier increasing by 6.3% to A$3.9 billion.
International operations have also been affected due to capacity increasing 13.7% in terms of seats because of the newly launched Sydney-Hong Kong routes as well as new trans-Tasman services.
Scurrah didn’t confirm nor deny whether this would be the only level of job cuts that we may witness at the carrier moving forward.
“As we go through this process, we’ll look at what it is required that gets us into that profitability and we’ll make the right decisions, as tough as they might be, to make sure we get there,” he said.
Another motion that the airline is undertaking is the deferral of deliveries, with new aircraft expected in July 2021 instead of next year. As well as it is down to the reduction in costs, it is also due to the ongoing crisis with the Boeing 737MAX.
The two accidents caused the airline to defer the deliveries of the aircraft it has ordered, which did not attribute to any of the losses announced by the airline.
It is also understood that Virgin Australia will be making cuts to its supply chain, aiming to bring the cost down by up to A$50 million.
It hasn’t been good news for the low-cost subsidiary Virgin Australia owns, dubbed Tigerair.
The aim for Virgin Australia’s success in the low-cost market appears not to be working financially currently, with the airline making an A$45 million loss, which was blamed on protected industrial action taken out by its staff, which cost Tigerair A$10.7m.
A positive note for the group was through the Velocity Frequent Flyer Program. Earnings from the program rose from A$110.1 million to A$120.2 million, signifying more usage from frequent flyers, being a step in the right direction for a repeat of business.
This now means that all eyes will be on Virgin Australia to make these changes pretty rapidly, which CEO Scurrah is doing currently.
It seems that Scurrah’s direction is working, especially with the Group’s losses decreasing. However, Scurrah needs to ensure that less money is spent in other areas while maintaining the products it aims to provide.