Virgin Australia to slash 3,000 jobs for slimmed post-coronavirus airline, Tiger brand dumped

| 05.08,20. 02:04 PM |

Virgin Australia to slash 3,000 jobs for slimmed post-coronavirus airline, Tiger brand dumped

Virgin Australia is scaling back its fleet of aircraft.(ABC News: John Gunn)

Virgin Australia has revealed plans to make about a third of its workforce redundant, with approximately 3,000 jobs expected to go under new owners Bain Capital, while 6,000 staff remain.

The private equity firm's plan for the airline sees the end of the Tiger Australia brand, although Virgin Australia said it would retain the air operator certificate so it could revive a low-cost carrier when the domestic holiday travel market fully recovered.

A key part of the plan is to operate an all Boeing 737 mainline fleet, with other aircraft types restricted to regional routes and charters.

This will mean removing ATRs, Boeing 777s, Airbus A330s and Tiger's Airbus A320s from the airline's fleet.

Virgin Australia chief executive Paul Scurrah said the airline had no choice but to shrink to survive amid the COVID-19 pandemic.

"Our best guess is that domestic and short-haul [international] demand may take three years to fully recover, with the very real chance that it could be longer," he told reporters on a conference call.

Mr Scurrah said ditching the turboprop ATR regional aircraft would mean some of Virgin's regional routes might not continue.

"We'll continue to service 18 of the top 20 regional ports through 737 coverage," he said.

"But it does mean, because we're exiting the ATR, there's quite a few routes that we will not be continuing with. We are currently reviewing options to continue servicing those routes previously flown through a number of different mechanisms."

The planes currently fly to Canberra, Tamworth, Port Macquarie and Albury. While Canberra might see 737 services instead, the other NSW towns were likely to either see Virgin services contracted out to another operator or lose Virgin flights altogether.

While long-haul international flights remain a distant proposition, Mr Scurrah confirmed "full intentions" to resume flights to Los Angeles and Tokyo "when the market recovers".

He also confirmed that most of Virgin Australia's short-haul international routes would continue.

"We do intend to have flying across the Tasman, we do intend to have a presence in Bali, Fiji, other Pacific islands and wherever that demand may re-emerge."

Bain's Virgin shuns 'low-cost model'
Mr Scurrah said the airline plans to employ about 6,000 people "when the market recovers, with aspirations for up to 8,000 in the future".

He told the ABC's Peter Ryan there were no guarantees against even further redundancies given the unpredictability of the COVID-19 pandemic.

"Can you guarantee it's going to be capped at 3,000? In the industry we're in today, nothing can be guaranteed."

However, many of those 6,000 staff who are currently stood down will remain on JobKeeper payments until those expire in March next year.

Their pay will be reduced in October, when the level of JobKeeper payment for full-time workers falls from $1,500 to $1,200, while part-time staff payments will halve to $750.

In June, Qantas announced it would cut at least 6,000 jobs across all parts of its business. A further 15,000 employees continue to be stood down without pay.

Virgin Australia said redundant staff would have their entitlements honoured and receive a two-year extension of employee travel benefits.

While lamenting the job losses, the Transport Workers' Union's (TWU) national secretary, Michael Kaine, welcomed the news that Virgin would remain a "full service" airline with some international routes.

"This has not been an easy process and Virgin workers have worked hard to ensure that instead of going down the route of a low-cost model where more jobs might have gone, Virgin will be able to retain its place in the market and hold onto the vital experience and skills of many of its workers," he said in a statement.

"The TWU and other unions have made the case for the maximum number of jobs at the airline and to ensure that it retains the elements that make it competitive and an important option for the travelling public, such as its maximising jobs, retaining regional operation Vara, tiered cabin classes, airport lounges and the airline's international arm."

One person who has found out he is keeping his job is Mr Scurrah, who has been reaffirmed as the airline's CEO by Bain Capital.

"Virgin has a great management team led by Paul Scurrah. We reaffirm that we are backing Paul to successfully lead Virgin through the current turbulence and into the future," Bain's managing director, Mike Murphy, said.

Travel credits, Velocity frequent flyer points 'carried forward'
Bain Capital said all travel credits and Velocity frequent flyer points would be carried forward under its ownership.

The airline said that "to preserve value for customers" given the current travel restrictions, for bookings made prior to the administration, booking dates will be extended to July 31, 2022 for travel until June 30, 2023.

Virgin said customers and travel agents will be notified of any flight cancellations related to today's announcements.

It said Tiger Australia customers and those travellers affected by any cancellations would be provided with a travel credit for use on Virgin Australia operated services.

Bain has a binding sale agreement with Virgin's administrators, Deloitte, but a deed of company arrangement to formally approve the sale still needs to be voted on at the second creditors' meeting.

That meeting was originally meant to be held later this month, however administrator Vaughan Strawbridge revealed today that the administrators will be seeking court approval for an extension of time to hold that meeting.

They currently plan to hold the meeting on September 4 and plan to send out their report to creditors on August 25.

Despite speculation that some creditors may seek to put forward an alternative proposal to Bain's buyout, Mr Strawbridge said he did not believe that could or would occur.

"We've already dealt with the assets in our sale agreement with Bain, so we can't put an alternative proposal that seeks to re-sell or deal with those assets that we've already sold," he said.


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