Category Archives: Virgin Australia Airlines

Reuters: Virgin Australia to cut a third of its Boeing 737 fleet under Bain ownership

From Reuters:

“Virgin Australia Holdings Ltd said on Wednesday it is returning a third of its fleet of Boeing Company 737 planes to lessors and financiers as part of a turnaround plan under new owner Bain Capital.

It has renegotiated financing terms for 56 of the 85 737s it held before it entered voluntary administration in April, a Virgin spokeswoman said, with the others to exit its fleet.

“Once demand returns, it remains our goal to grow our fleet to 75 Boeing 737 aircraft,” the spokeswoman said.”

Virgin Australia resets as a Boeing 737 operator, Tigerair Australia brand closed down

Virgin Australia Group has made this announcement:

Key points:

• Plan for a stronger, more profitable and competitive Virgin Australia coming out of voluntary administration
• Focus on delivering exceptional experiences at great value with Virgin Australia’s core domestic and short-haul international business
• Virgin Australia to provide customers with the value of travel credits post administration with validity dates extended for bookings made prior to administration
• Resetting Virgin Australia to meet lower global and Australian demand, including:
– Reduction in cost base to meet sector uncertainty and COVID-19 market conditions
– Securing approximately 6,000 jobs when the market recovers with 3,000 roles impacted
– Simplified all-Boeing 737 mainline fleet and the retention of the regional and charter fleet, but removing ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320 aircraft types.
Long-haul international flying important part of plan but suspended until global travel market recovers
Tigerair Australia brand discontinued with Air Operator Certificate (AOC) retained to provide option for ultra-low-cost operations when market recovers.
– Continued commitment to regional and charter flying.

The Virgin Australia Group has announced a plan for a stronger, more profitable and competitive business, building on its unique culture and securing approximately 6000 jobs as it prepares to exit voluntary administration under the ownership of Bain Capital.

CEO COMMENTARY

Virgin Australia Group CEO and Managing Director Paul Scurrah said together with Bain Capital, the plan will help to re-establish Virgin Australia as an iconic Australian airline, bringing strong competition for travellers while securing approximately 6,000 direct jobs and indirect employment for more than 30,000 Australians.

“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,” said Mr Scurrah.

“Demand for domestic and short-haul international travel is likely to take at least three years to return to pre-COVID-19 levels, with the real chance it could be longer, which means as a business we must make changes to ensure the Virgin Australia Group is 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.

“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, requiring long-term capital, a lower cost base and be more focused on providing exceptional experiences through a combination of great people and world class technologies.

“Working with Bain Capital, we will accelerate our plan to deliver a strong future in a challenging domestic and global aviation market. We believe that over time we can set the foundations to grow Virgin Australia again and re-employ many of the highly skilled Virgin Australia team.

“Our initial focus will be on investing in the core Virgin Australia domestic and short-haul international operation alongside our 10-million-member strong Velocity Frequent Flyer program, continuing to offer an extensive network of destinations, a domestic lounge network and value for money for customers.

“Bain Capital recognises the importance of Virgin Australia’s loyal customers, and that’s why they will be provided the value of their travel credits post administration with validity significantly extended to ensure they have plenty of opportunity to book tickets to their favourite destinations.

“While these changes are important to manage the impact of COVID-19, they involve some very tough decisions. We expect approximately 3,000 roles will be impacted as a result of the changes announced today. However, our intention is to secure approximately 6,000 jobs when the market recovers with aspirations for up to 8,000 in the future. To those that leave the business, I want to thank them for the role they’ve played in making this a great airline. They will be closely supported through our alumni program, have all their entitlements honoured and be provided with a two-year extension of employee travel benefits and early access to retiree and long service benefits.

“Our people have shown incredible resilience under tough circumstances. They are what set the Virgin Australia Group apart and make us so unique. We hope to welcome many of them back as we start to grow again in the future.

“Virgin Australia has been a challenger in the Australian market for 20 years, and as a result of this plan and the investment of Bain Capital we are going to be in a much stronger position to continue that legacy.”

PLAN FOR A STRONGER VIRGIN AUSTRALIA GROUP

The plan is anchored around six key points:

1. Overhaul the cost base, and simplify everything, starting with the fleet

To build a successful airline, the Group will align costs with a depressed and uncertain revenue outlook, simplifying its fleet to realise cost efficiencies and remove operational complexity.

The Group will move to an all-Boeing 737 mainline fleet for domestic and short haul operations which will see the removal of ATR, Boeing 777, Airbus A330 and Tigerair Airbus A320 aircraft.

The Group’s regional and charter fleet will remain, while the company reviews options at Virgin Australia Regional Airlines (VARA), including different operating models to support continued regional and charter flying.

The Group will also undertake a supplier contract review across its operations including products, services and facilities to better align with the company’s future size and requirements and lowering costs significantly.

Virgin Australia will consolidate its footprint and will move its corporate headquarters to 275 Grey Street in Brisbane’s Southbank. This follows a consolidation of its corporate offices in Sydney.

Long-haul international operations are an important part of the Virgin Australia business. However, given current international travel restrictions, the airline will continue to suspend flights to Los Angeles and Tokyo with the intention to recommence and grow long-haul flights when sufficient demand returns. Customers will continue to have access to international markets through the airline’s codeshare partners.

The Tigerair brand will be discontinued in the market as there is not sufficient customer demand to support two carriers at this time. Tigerair Australia’s Air Operator Certificate (AOC) will be retained to support optionality to operate an ultra-low-cost carrier in the future when the domestic market can support it.

Note: Tigerair Australia suspended operations on March 25, 2020.

2. Focus on customer value

Virgin Australia aims to be the best value carrier in the market, not a low-cost carrier. It will offer exceptional experiences at great value, regardless of purpose of travel. The airline will serve business travellers, including corporates and customers travelling for a holiday and visiting loved ones, and maintain a two-class cabin offering.

Virgin Australia will continue to offer choice and convenience through an extensive network of domestic and short-haul international destinations including frequent capital city connections and services to leisure and regional markets as part of the company’s future network plans. Virgin Australia will also maintain a network of lounges in key domestic locations with a plan to re-open when demand returns.

Virgin Australia currently operates a reduced network of services to 28 towns and cities across Australia and will continue to add destinations and frequencies in line with demand and to support the nation’s economic recovery from COVID-19.

Virgin Australia will continue to focus on delivering the best on-time performance and maintain an exceptional safety record and safety culture.

In response to COVID-19, Virgin Australia has introduced a range of health and wellbeing measures including a pre-departure eligibility questionnaire, contactless check-in, expanded social distancing measures, and more frequent cleaning onboard and at the airport.

3. Harness culture

The Group’s culture is unique and is the heart and soul of both the airline and Velocity Frequent Flyer. Over the past 12 months, the Group has gone to great lengths to unlock its culture and harness the spirit of its people. The Group will continue to reinvigorate the Virgin Australia brand and its passion for customer service, while embracing the diversity, talent and strength of its people.

4. Investment in world class digital and data technologies

The Group will invest significantly in the comprehensive digital re-platforming of both the airline and Velocity Frequent Flyer program. It will accelerate the Group’s vision for the future, to not only improve Virgin Australia’s commercial capability and guest experience, but significantly enhance the employee experience and increase the pace of profitable revenue growth, enabling faster and bigger job growth opportunities.

5. Strong balance sheet and investment capital for both transformation and growth

The Group will emerge from Voluntary Administration with a strong balance sheet, worthy of an investment grade rating, providing resilience and future growth potential.

Backed by Bain Capital, one of the world’s leading private investment firms with more than $AUD150 billion assets under management, Virgin Australia will have a strong balance sheet to withstand material future shocks to the industry.

6. Jobs and future growth

The Group’s people have shown extraordinary resilience during this uncertain period and the focus now is to preserve as many jobs in the immediate term as possible while building a business that is healthy and sustainable for decades to come.

As a result of the changes announced today, including the transition to a single Boeing 737 fleet for domestic and short-haul flying, it is expected approximately 3,000 jobs will be impacted, primarily across the operations functions, and corporate roles which directly support the operation. Formal consultation with unions and employee groups has commenced today, and all options including voluntary redundancy, redeployment, leave without pay and flexible work arrangements will be explored to retain as many jobs as possible.

While devastating for our people, making these changes now will secure approximately 6,000 jobs once market demand recovers, with potential to increase to 8,000 jobs in the future. Team members who remain stood down as the Group waits for domestic and international travel restrictions to ease, or are on Leave Without Pay, will continue to receive the JobKeeper payment until it expires in March.

All team members that leave the business will depart with care and respect. Their entitlements will be paid in full and the Group is working with over 100 partners to identify short and long-term redeployment opportunities.

TRAVEL CREDITS AND SUPPORT FOR GUESTS

Bain Capital understands customers and staff are at the heart of the Virgin Australia business. As an acknowledgement of this, all travel credits and Velocity Frequent Flyer points will be carried forward under its ownership.

Virgin Australia will provide customers with the value of their travel credits post administration. To preserve value for customers with credits for bookings made prior to administration, booking dates will also be extended to 31 July 2022 for travel until 30 June 2023. Further information about the use of credits will be provided to customers in due course.

Customers and travel agents will be notified directly of any flight cancellations associated with the announcements made today. Tigerair Australia customers and those affected by any cancellations will be provided a travel credit for use on Virgin Australia operated services.

VOTE OF CREDITORS

Deloitte Restructuring Services partners and Administrators Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes were appointed on 20 April 2020. They have entered into a binding sale agreement for the business with Bain Capital and continue to work with Bain and Virgin Australia management on the restructuring of the airline.

With full support of Deloitte and Bain Capital, this plan will form part of a Deed of Company Arrangement (DOCA), which will be put to a vote at the second creditors’ meeting.

Tigerair Australia aircraft photo gallery:

Tigerair Australia aircraft slide show:

https://airlinersgallery.smugmug.com/frame/slideshow?key=cLnW72&speed=3&transition=fade&autoStart=1&captions=0&navigation=0&playButton=0&randomize=0&transitionSpeed=2

Bain Capital to acquire Virgin Australia

Virgin Australia has made this announcement:

Virgin Australia is today a step closer to re-launch with the announcement that Bain Capital has entered into an agreement with its Administrators to become the new owner of the airline.

The Virgin Australia Group will now work closely with Bain Capital on its vision for the business moving forward.

Virgin Australia Group Chief Executive Officer and Managing Director, Paul Scurrah, said that today was a significant step forward in securing the airline’s future.

“This is a great day for Virgin Australia and a huge milestone as we move forward with Bain Capital,” said Mr Scurrah.

“Bain Capital has spent many hours over the past weeks speaking to us and getting a deep understanding of our business and working to secure a deal with our administrators. We know they are committed to investing in the airline and we are thrilled to be working with them into the future.

“It was always the goal to bring our airline out of administration as quickly as possible in a stronger financial position and this announcement brings us a step closer to that. Bain’s investment will cement our future as a major Australian carrier, secure thousands of direct and indirect jobs, and ensure we can continue to bring competition to millions of customers for many years to come.

“We thank our customers and partners for their loyalty and support during such a challenging period. Australia needs a second airline and, with the significant backing of Bain Capital, we’ll continue to serve our customers with competitive fares and high-quality air travel into the future.

“We also thank Deloitte partners John Greig, Sal Algeri, Richard Hughes and Vaughan Strawbridge, and the teams at Morgan Stanley, Clayton Utz and Houlihan Lokey for their work getting us to this point.”

Approved for release by John Greig, Administrator, Deloitte.

Virgin Australia aircraft photo gallery:

Virgin Australia increases domestic flying as new safety and wellbeing measures are introduced

The Virgin Australia Group will increase domestic flying and introduce new safety and wellbeing measures as state travel restrictions begin to ease and more travellers return to the skies.

The additional services will see Virgin Australia double current capacity by early July, adding approximately 30,000 seats across 320 flights per week to its domestic schedule.

• Expanded capital city connections and frequencies between Sydney, Brisbane, Melbourne and Perth

• Resumption of services between Brisbane-Adelaide, Brisbane-Canberra, Brisbane-Perth and Sydney-Perth

• More flexibility to travel with increased frequencies on intrastate Queensland and Western Australia routes

• New set of safety and wellbeing measures to minimize risks associated with COVID-19

Virgin Australia will also introduce a comprehensive new set of safety and wellbeing measures including pre-departure eligibility and health screening, contactless check-in, more frequent cleaning onboard and at the airport, and expanded social distancing measures.

The measures, which will be fully implemented by 12 June have been developed in close collaboration with airlines and airports across Australia as part of the Australian Aviation Recovery Coalition. The measures will continue to be reviewed in line with any changes to its schedule, the latest medical advice, government restrictions and guest feedback.

COMMENTARY

Virgin Australia Group Chief Commercial Officer John MacLeod said as state travel restrictions further ease, demand for air travel has started to return which is why more services and increased frequencies are being added.

“By early July, we will have gradually added approximately 30,000 seats across 320 flights per week to our schedule – more than doubling our capacity and providing more flexibility for guests.

“It’s early days but these services will be a welcomed boost to Australia’s tourism industry and help the nation’s economy and aviation sector to rebuild. The services will also give us the opportunity to bring team members back to work, who I know have been looking forward to welcoming and sharing our award-winning customer service.

“Importantly as travel begins to increase, the safety and wellbeing of guests remains crucial, which is why measures to minimise risks associated with COVID-19 are being introduced. We recommend that any guest who is feeling unwell or has flu-like symptoms, do not travel – flights for travel up until 30 September can be changed without fees if needed.”

Virgin Australia Group Medical Officer Dr Sara Souter said the new measures will ensure that we appropriately manage the latest advice from government and remain vigilant when it comes to hygiene and personal protection.

“We will be adopting contactless check-in, a new sequenced boarding and disembarkation process and guests will see more frequent cleaning of high touch surfaces on the aircraft and within the airport. In addition, a new health questionnaire will be rolled out as part of the check-in process to ensure passengers are fit to fly and to assist with contact tracing,” said Dr Souter.

“It’s important to remember that the inflight environment is very different to that of other modes of group transport, with a range of protective features including hospital-grade air filtration systems, directional airflow and high seat backs between travellers. The international evidence supports very low-risk of COVID-19 transmission inflight, which is also our experience to-date in Australia.

“Everyone has a role to play, which is why we are asking guests to be mindful of their own personal protection and others when moving around the cabin. Team members and guests are being encouraged to regularly wash their hands and avoid touching their face, and hand sanitiser and masks will be available to all guests on request.

“Wherever possible, we will try to do our best to keep an empty seat between guests travelling alone, however this may not always be available. Families and travelling companions will be able to sit together.”

Guests travelling are encouraged to download the Australian Government’s COVIDSafe tracing app. Guests should also ensure their details are updated via the My Bookings function at virginaustralia.com or with their travel agent prior to commencing travel.

Virgin Australia aircraft photo gallery:

Virgin Australia enters voluntary administration

Virgin Australia Holdings Limited on April 21 entered voluntary administration to recapitalize the business and help ensure it emerges in a stronger financial position on the other side of the COVID-19 crisis.

The Group’s Board of Directors has appointed Vaughan Strawbridge, John Greig, Sal Algeri and Richard Hughes of Deloitte as voluntary administrators of the company and a number of its subsidiaries. Velocity Frequent Flyer, while owned by the Group, is a separate company and is not in administration.

The decision comes as the Group has continued to seek financial assistance from a number of parties, including State and Federal Governments, to help it through the unprecedented crisis, however is yet to secure the required support.

Virgin Australia will continue to operate its scheduled international and domestic flights which are helping to transport essential workers, maintain important freight corridors, and return Australians home. The administrators will be supported by the Group’s current management team, led by Chief Executive Officer Paul Scurrah, and will work closely with team members, suppliers, and partners throughout the process.

Administrator, Vaughan Strawbridge, said: “Our intention is to undertake a process to restructure and re-finance the business and bring it out of administration as soon as possible.

“We are committed to working with Paul and the Virgin Australia team and are progressing well on some immediate steps. We have commenced a process of seeking interest from parties for participation in the recapitalisation of the business and its future, and there have been several expressions of interest so far,” said Mr Strawbridge.

Virgin Australia Group Chief Executive Officer, Paul Scurrah, said: “Our decision today is about securing the future of the Virgin Australia Group and emerging on the other side of the COVID-19 crisis.

“In 20 years, the Virgin Australia Group has earned its place as part of the fabric of Australia’s tourism industry. We employ more than 10,000 people and a further 6,000 indirectly, fly to 41 destinations including major cities and regional communities, have more than 10 million members of our Velocity loyalty program, and contribute around $11 billion to the Australian economy every year,” said Mr Scurrah.

“Australia needs a second airline and we are determined to keep flying. Virgin Australia will play a vital role in getting the Australian economy back on its feet after the COVID-19 pandemic by ensuring the country has access to competitive and high-quality air travel.”

The Board of Directors regret that these events have come to pass and acknowledge all the Group’s employees for their hard work and contribution. The COVID-19 pandemic came as the Group was progressing on a significant transformation program to reset its cost base including consolidating its workforce, simplifying the fleet, withdrawing from unprofitable routes and reviewing and renegotiating supplier agreements.

Virgin Australia aircraft photo gallery:

Virgin Australia to operate a minimal network schedule

Virgin Australia has made this announcement:

Here to get you home

As a major Australian airline, we are proud to support the Federal Government in returning passengers home and enabling essential travellers to continue flying during this time, as well as maintain important freight links into and across the country.

In addition to repatriation flights to Los Angeles and Hong Kong, Virgin Australia will operate 64 domestic return services each week as per the below schedule.

If you have been impacted by the recent flight cancellations and still wish to travel, you may rebook using the travel credit issued to a Travel Bank. If you have not received communications from us regarding your Travel Bank, please call our Guest Contact Centre on 13 67 89 to re-book on the services listed below.

Network schedule

Our domestic and international schedules during this time can be found by selecting either option below.

Domestic flightsInternational flights

We are pleased to be offering 64 return services across Australia each week. The route map below displays the routes we are operating during this time, and the schedule lists the days of operation per route.

Origin Destination Days of operation
Adelaide  Melbourne
Melbourne  Adelaide
Broome  Perth
Perth  Broome
Brisbane  Cairns
Cairns  Brisbane
Brisbane  Melbourne
Melbourne  Brisbane
Brisbane  Mackay
Mackay  Brisbane
Brisbane  Rockhampton
Rockhampton  Brisbane
Brisbane  Sydney
Sydney  Brisbane
Brisbane  Townsville
Townsville  Brisbane
Canberra  Melbourne
Melbourne  Canberra
Kalgoorlie  Perth
Perth  Kalgoorlie
Kununurra  Perth
Perth  Kununurra
Karratha  Perth
Perth  Karratha
Melbourne  Perth
Perth  Melbourne
Melbourne  Sydney
Sydney  Melbourne
Gold Coast  Sydney
Sydney  Gold Coast
Perth  Port Hedland
Port Hedland  Perth
Perth  Newman
Newman  Perth

We will always do our best to get you to your destination on time, however, we do not guarantee flight times or schedules and they do not form part of your contract with us.

Our repatriation flights are operating from Australia to Hong Kong and Los Angeles to help Australians return home safely.

Origin Destination Days of operation
Brisbane
Departing 1000
Hong Kong
Arriving 1700
Hong Kong
Departing 0900
Brisbane
Arriving 2010
Brisbane
Departing 1105
Los Angeles
Arriving 0710
Los Angeles
Departing 1330
Brisbane
Arriving 2030

We will always do our best to get you to your destination on time, however, we do not guarantee flight times or schedules and they do not form part of your contract with us.

Virgin Australia drops all domestic routes except one

Virgin Australia Group made this announcement:

The Virgin Australia Group continues to monitor passenger demand and has made further adjustments to its flying schedule. Demand for travel has continued to decline with border restrictions and the need for people to stay home due to social distancing measures.

The Group will continue to operate a daily service between Melbourne and Sydney but will temporarily suspend other passenger flying from Friday, April 10, 2020 while restrictions remain in place. We continue to support the Australian Government with flights between Los Angeles (below) and Hong Kong to help bring Australians home and maintain important freight links in and out of the country.

Demand for charter services in the resources sector remains strong and we continue to support our customers with services. We also remain open to charter opportunities or any flying the Australian Government needs support with.

We stand ready to support Australians flying to their destinations again when travel restrictions ease.

All photos by Virgin Australia.

Virgin Australia Group revises its domestic schedule, Tigerair Australia suspends operations, asks for state aid

The Virgin Australia Group has confirmed a revised domestic schedule following the Group’s decision to extend domestic capacity reductions from 50 percent to 90 percent, including the suspension to Tigerair Australia domestic services effective immediately.

The Group will continue to operate near daily services to 17 Australian destinations for the purpose of transporting essential services, critical freight and logistics. The Group will temporarily suspend services to 19 Australian destinations from midnight March 27 to June 14, 2020.

Virgin Australia will temporarily suspend services to the following destinations from midnight March 27 and June 14, 2020:

  • Albury
  • Alice Springs
  • Ayers Rock (Uluru)
  • Ballina Byron
  • Coffs Harbour
  • Cloncurry
  • Darwin
  • Emerald
  • Hervey Bay
  • Hamilton Island
  • Hobart
  • Mount Isa
  • Launceston
  • Mildura
  • Sunshine Coast (Maroochydore)
  • Newcastle
  • Whitsunday Coast (Proserpine)
  • Port Macquarie*
  • Tamworth

The below Virgin Australia domestic services will continue to operate, at a significantly reduced rate:

Brisbane

  • Brisbane – Sydney
  • Brisbane – Cairns
  • Brisbane – Melbourne
  • Brisbane – Mackay
  • Brisbane – Perth
  • Brisbane – Rockhampton
  • Brisbane – Townsville

Melbourne

  •  Melbourne – Sydney
  •  Melbourne – Brisbane
  •  Melbourne – Canberra
  •  Melbourne – Perth
  •  Melbourne – Adelaide

Sydney

  • Sydney – Melbourne
  • Sydney -Brisbane
  • Sydney – Gold Coast

Perth

  • Perth – Melbourne
  • Perth – Brisbane
  • Perth – Broome
  • Perth – Kalgoorlie
  • Perth – Kununurra
  • Perth – Karratha
  • Perth – Onslow
  • Perth – Port Hedland
  • Perth – Newman
  • Perth – Christmas Island / Cocos Keeling Islands

Virgin Austraila’s charter-operated services continue to operate as scheduled.

Tigerair Australia will temporarily suspend all services effective immediately.

In other news, the group has asked for a $1.4 billion loan from the Australian government.

Virgin Australia aircraft photo gallery:

Tigerair Australia aircraft photo gallery:

Virgin Australia Group provides an update on coronavirus response

Virgin Australia Group has made this announcement:

Key points:
• Group capacity reduction to increase from 3 percent to 6 percent in 2H20 and increase to 7.7 percent in 1H21
• Domestic capacity reduction to increase from 3 percent to 5 per cent for 2H20 and increase to 6.2 percent in 1H21
• International capacity reduction to increase from 4.8 percent to 8 per cent in 2H20 and increase to 10.3 percent in 1H21
• This includes reducing Los Angeles, Japan, and Trans-Tasman services and the exit of Auckland services between Tonga and Rarotonga
• Temporary reduction in Chairman and Independent Board Director fees by 15 percent
• Additional cost reduction measures include a removal of management bonuses, no base salary increases for non-EA team members, and leave initiatives
• Earning guidance suspended due to uncertainty and the evolving nature of the COVID-19 situation
The Virgin Australia Group has announced additional reductions in capacity and cost measures to address the impact of COVID-19 and has also reassured guests of the onboard health and safety measures to enhance their protection.
Over the past two weeks, the global travel industry has seen a significant decline in forward bookings due to the rapid spread of COVID-19 and consumer uncertainty surrounding overseas travel.
As a predominately domestic airline, the Virgin Australia Group is insulated from some of the broader international impacts. The Group’s domestic operations account for 88 percent of passengers and 78 percent of flight revenue. However, the Group is taking action to reduce capacity in the international markets it operates in and reduce domestic capacity in line with weakened demand in certain markets.
The Group continues to maintain its high health and safety standards for all guests and crew. As an extra precaution during this time, it has also recently implemented additional hygiene measures in the air and on the ground.
Domestic changes
Across the Group, domestic capacity will be cut by 5 per cent for 2H20, driven by a reduction of 7 percent in Q4. This is an increase on the 3 percent reduction previously announced on  February 26, 2020 due to continued market softness and decreased demand and forward bookings.
Services that will be reduced are mainly on markets that have multiple daily frequencies, minimising disruption to guests.
International changes
The Group has observed increasing weakness in international forward bookings and is reducing international capacity by 8 per cent in 2H20 to meet current and expected demand. The international changes announced today follow the Group’s recent withdrawal from Hong Kong services.
Key changes are:
• Reducing the daily Brisbane to Haneda service to three times per week from March 29 until May 3.
• Reducing the daily Sydney to Los Angeles service to five times per week from early May to early June.
• Further reducing Trans-Tasman services from a 2.6 percent reduction to 6 percent for 2H20, including the strategic reduction of frequencies on Auckland-Melbourne to daily from May and a temporary reduction on Auckland-Sydney services.
In addition, the Group also announced an exit of the following services as a continuation of the ongoing network strategic review:
• Auckland-Tonga to cease on May 1.
• Auckland-Rarotonga to cease on July 21.
The Group will continue to assess any impact from COVID-19 and respond with relevant changes as conditions evolve.
Continued focus on cost reduction
In addition to the already announced 750 non-Enterprise Agreement (EA) role reductions and middle and senior management salary freezes, the Group is also undertaking further measures to reduce costs including:
• Seeking relief on Government charges.
• A decrease in marketing spend.
• Stopping all discretionary spend and non-critical capital expenditure.
• Targeting a reduction in hotel accommodation charges.
• Leave initiatives including using accrued annual leave or unpaid leave or reducing standard working hours where operationally available.
• A freeze on all external recruitment and the use of consultants for the remainder of FY20.
• Chairman and Independent Directors to reduce their base fees by 15 per cent temporarily. Nominee Directors do not currently receive fees.
• Reducing all bonuses to zero across the Group for FY20.
• No base salary increases for non-EA team members.
Advice for guests
While the overall risk in Australia of contracting COVID-19 in the community remains low, the Group has taken a number of steps to enhance protection on its flights.
All aircraft are cleaned to the highest standards daily, crew maintain the highest hygiene standards on board, and all flights are equipped with hand sanitiser and face masks.
There is also a commercial policy available for guests wishing to change their travel due to COVID-19. Virgin Australia guests with new or existing international bookings through to 30 June 2020 have the option to change their flight to a later date and/or to a different destination, without incurring any change fees1.
As a result of the new measures announced today, guests with any changes to their bookings will be contacted directly with alternative travel arrangements including refunds for any routes that the Group is no longer servicing.
Update on financial position
The Group is suspending earnings guidance for FY20 due to ongoing uncertainty of the COVID-19 situation.
The Group currently has a cash position in excess of $1 billion, with no significant debt maturities until October 2021 and no new aircraft deliveries until July 2021.
CEO commentary
Virgin Australia Group CEO and Managing Director Paul Scurrah said the global industry has seen a significant decline in demand and the Group continued to assess its response to the evolving situation.
“We have already announced a number of measures to mitigate the impact from COVID-19, however the pace of the global spread and decline in demand has required us to implement further changes today to minimise the future financial impact,” said Mr Scurrah.
“As a largely domestic airline, we are less exposed to the impact on international travel, however we remain disciplined in our focus on managing capacity in response to forward bookings and continuing to reduce costs across the business. It’s worth noting that domestic operations account for 88 per cent of our passengers and 78 per cent of our flight revenue.
“The reductions in services will also mean reduced flying for our crew and we are committed to working with them through this period and providing a range of options.
“Pleasingly, our travel bookings to Western Australia and local leisure destinations such as the Gold Coast, Sunshine Coast, and Hamilton Island continue to be ahead of where they were at the same time last year. This demonstrates Australians are continuing to travel within our own backyard and support local tourism.
“These measures announced today are intended to soften the impact from COVID-19 and safeguard our company for the future.”
Virgin Australia aircraft photo gallery:

Virgin Australia announces further route cuts, will remove 7 Tigerair Airbus A320s

The Virgin Australia Group has announced a number of further changes as part of its fleet and network review to help manage costs, improve financial performance and respond to current market conditions.

The changes come as coronavirus has a weakening effect on international and domestic demand, with an expected $50-75 million impact to the Group’s earnings for FY20 as reported in its 1H20 results today.

The Group will reduce overall network capacity by three percent in 2H20, which includes a three percent reduction in domestic capacity and short-term capacity reductions on the Tasman in Q4FY20 to manage current conditions.

The changes focus largely on leisure destinations where demand is weaker, and where Virgin Australia and Tigerair both operate, and includes the withdrawal from five unprofitable Tigerair routes and some frequency consolidation on existing domestic routes where demand has also been impacted.

In line with the reduction, seven additional Tigerair Airbus A320 aircraft will cease flying by October 2020. This follows the announcement of five aircraft exits in November 2019, bringing the total to 12, which will help the Group further manage costs and improve financial performance.

The impact of the current fleet reduction initiative is equivalent to approximately a five percent Virgin Australia Group capacity reduction in FY21.

Network changes

Tigerair Australia will exit the following domestic leisure routes in addition to frequency reductions on existing routes:

  • Melbourne-Coffs Harbour from April 27, 2020
  • Sydney-Coffs Harbour from April 27, 2020
  • Adelaide-Sydney from April 27, 2020
  • Sydney-Cairns from April 27, 2020
  • Hobart-Gold Coast from April 28, 2020

Internationally, the Group already announced the withdrawal from the Hong Kong market due to ongoing challenges with the route, impact of civil unrest and coronavirus on demand. Short-term capacity reductions will be made on the Tasman in Q4FY20 due to weakening demand attributable to coronavirus.

Passengers with bookings impacted by these changes will be proactively communicated with and re-accommodated onto other services. Tigerair customers impacted by the above route exits will be re-accommodated onto other Tigerair flights where possible, or onto Virgin Australia services.

Fleet changes

Seven Airbus A320 aircraft are scheduled to exit Tigerair’s fleet in addition to two A320 aircraft exits from Tigerair previously announced in November 2019, making a total of nine A320s to cease flying by October 2020. Two Boeing 737 aircraft will be transferred from Virgin Australia’s fleet into the Tigerair fleet.

The changes accelerate the transition of Tigerair Australia to an all-Boeing 737 fleet, which brings cost and operational advantages to the low-cost carrier over operating multiple fleet types.

CEO commentary

Virgin Australia Group CEO and Managing Director, Paul Scurrah, said “Today, we’ve made some important fleet and network changes that will help us improve our financial performance and respond to market conditions.

“There’s no doubt we are operating in a tough market, and we need to make sure our capacity deployment is disciplined to ensure our routes are profitable for our business. Coronavirus is having a significant impact on the travel industry and these changes will help us manage the changes we’re seeing in demand.

“We maintain a very strong network of more than 450 destinations between us and our partners and, whilst we have made some announcements to manage costs today, we are as focused as ever on continuing to deliver a great experience for our customers.

“I’m pleased we can accelerate the transition of Tigerair to an all Boeing 737 fleet which will help get the business into a better financial position moving forward.”

Tigerair aircraft photo gallery: