Tag Archives: Tigerair (Australia)

Tigerair Australia says goodbye

Tigerair Australia, now owned by Bain Capital, issued this statement:

“There is no denying these are tough times for everyone in the travel and tourism industry.

Today, (September 11) we announced the difficult decision to discontinue the Tigerair Australia brand after nearly 13 years of operation, due to the devastating impacts COVID-19 is having on our industry.

To all of our wonderful people, past and present, thank you. Thank you for your unwavering commitment to our airline, for always rising to the occasion, and for never letting adversity stand in your way.

To our customers and partners, thank you for your loyalty and support. It’s been an honour flying you around this great country of ours.”

Tigerair commenced operations on November 23, 2017 with a flight from Melbourne to the Gold Coast.

Tigerair Australia aircraft photo gallery:

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

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 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:

Virgin Australia to shift its Bali flights to Tigerair Australia

Virgin Australia Holdings Limited (Virgin Australia Group) (Virgin Australia Airlines and Tigerair Australia) (Brisbane) is making moves after it continues to reduce its losses overall.

Virgin Australia is dropping its leisure routes to Bali and Thailand and will replace the service with its lower-cost subsidiary Tigerair (Australia). The company is making this move in order to reduce its international losses that widened in the fiscal year to $69 million (AU).

Virgin Australia will cease flying from Adelaide, Melbourne and Perth to Denpasar, (Bali, Indonesia) in March 2016 and will instead use its no-frills Tigerair subsidiary on those routes.

Virgin Australia on February 1, 2016 is also canceling service to Thailand, where it currently operates the Perth – Phuket route five days a week

Virgin Australia outlined the route changes with this press release:

Virgin Australia logo-2The Virgin Australia Group has announced plans to optimize its international network to deliver improved fleet utilization and meet customer demand on key trans-Tasman and short-haul international routes.

Tigerair Australia:

The Tigerair Australia brand will launch in the short-haul international market with Denpasar (Bali) as its first international destination to enable the Group to better cater to the changing dynamics in the region.

From March 23, 2016, Tigerair Australia will use three all economy configured Boeing 737-800 aircraft to offer the following services to Denpasar (Bali), subject to relevant regulatory and operational approvals being secured:

Adelaide-Denpasar: five return services per week
Melbourne-Denpasar: daily return services
Perth-Denpasar: daily return services
Members of Virgin Australia’s loyalty program Velocity Frequent Flyer will be able to redeem Velocity Points for seats on Tigerair Australia services to Denpasar.

Virgin Australia route withdrawals:

From March 23, 2016, Virgin Australia will withdraw from the following routes:

Adelaide-Denpasar: five return services per week
Melbourne-Denpasar: daily return services
Perth-Denpasar: eight return services per week

The last flights on these routes will operate on March 22, 2016.

From February 1, 2016, Virgin Australia will withdraw from the Perth-Phuket route, with the last flight operating on January 31, 2016.

Virgin Australia will continue to operate to Denpasar from Sydney, Brisbane and Port Hedland.

Virgin Australia route increases:

From October 25, 2015 onwards, Virgin Australia will increase capacity into New Zealand, in conjunction with our alliance partner Air New Zealand. Virgin Australia will also increase capacity to Fiji and the Solomon Islands to meet customer demand.

These increases represent more than 52,000 additional seats on trans-Tasman and Pacific routes during the 2016 financial year.

Additional capacity to be operated by Virgin Australia:

  • Sydney-Christchurch: addition of two return services per week from October 25, 2015
  • Melbourne-Christchurch: addition of one return service per week from November 6, 2015
    Additional seasonal capacity to be operated by Virgin Australia:
  • Brisbane-Auckland: addition of one return service per week between October 26, 2015 and  December 13, 2015, two return services per week between December 14, 2015 and January 24, 2016, and one return service per week between February 29, 2016 and March 27, 2016
  • Brisbane-Dunedin: addition of one service per week from December 18, 2015 to January 22, 2016
  • Brisbane-Wellington: addition of one service per week from December 14, 2015 to January 24, 2016
  • Brisbane-Apia: addition of one service per week from December16,  2015 to January 13, 2016
  • Brisbane-Honiara: addition of one service per week from  June 22, 2015 to January 25, 2016
  • Brisbane-Nadi: addition of one service per week between December 12, 2015 and  January 23, 2016
  • Sydney-Nadi: upgrade of Saturday Boeing 737-800 services to Airbus A330 services from  June 20, 2015 to October 24, 2015 and from December 12, 2015 to January 23, 2016.
  • An additional Boeing 737-800 service will also operate on Saturday December 26, 2015 and Saturday January 3, 2016

These decisions came as the company reported its fiscal year results:

Virgin Australia logo-2

Virgin Australia Holdings Limited (Virgin Australia today reported an Underlying Loss Before Tax of $49.0 million (all dollar amounts are in Australian dollars) for the 2015 financial year, including the impact of 100 per cent consolidated Tiger Airways Australia Pty Limited (Tigerair Australia) performance from October 17, 2014.

Virgin Australia Group Chief Executive Officer John Borghetti said: “The Virgin Australia Group has delivered a significant improvement in performance for the 2015 financial year, which reflects the positive trajectory of the overall business”.

“Over the past financial year, the Group’s Return on Invested Capital has increased from 1.4 to 6.1 per cent. Improving our Return on Invested Capital will continue to remain a strong focus for the Group. I’m pleased to confirm that based on current market conditions, all fundamental business metrics are on track for the Group to return to profitability and report a Return on Invested Capital in line with its cost of capital for the 2016 financial year. The Virgin Australia Group’s current cost of capital is approximately 10 per cent.

“Unit revenue is increasing, unit costs are decreasing and operational performance and customer satisfaction continue to improve.

“Unit cost declines are a result of the Group’s disciplined execution of our $1 billion cost reduction program. The Group has continued to decrease Underlying CASK while investing in the customer experience. Additionally, the full acquisition of Tigerair Australia has given us further capability to lower the Group’s unit costs.

“The Group is ahead of our target of $1 billion of cumulative cost savings by the end of financial year 2017. We are now on track to achieve in excess of $1.2 billion in cumulative cost savings by this date, excluding fuel pricing and hedging benefits.

“The Group’s balance sheet is also in a much stronger position, with the highest ever full year unrestricted cash balance, a $225.8 million improvement in Operating Cash Flow and a 20 per cent improvement in financial leverage on the 2014 financial year.

“I’m pleased to report that we are seeing strong results from the transformation of Virgin Australia Domestic. The business reported an Underlying EBIT of $111.1 million for the 2015 financial year, an improvement of $210.1 million on the prior corresponding period.

“Over the 2015 financial year Virgin Australia Domestic has continued to drive positive yield growth, led the major carriers in On Time Performance and achieved record customer satisfaction with the end-to-end customer experience . Based on results reported to date since financial year 2013 , Virgin Australia Domestic has narrowed the Revenue per Available Seat Kilometre differential versus our major competitor and retained our strong cost advantage. The business is well positioned for future growth.

“Whilst there are challenges on the international front, we are confident with our improvement plan.

“The Group’s unit revenue gains combined with our continued leadership on cost will drive earnings growth going forward. We now have a strong balance sheet from which to execute our strategy and a powerful portfolio of growth businesses in Velocity Frequent Flyer, Charter, Cargo and Tigerair Australia, that will support the Group’s ongoing earnings development and diversification.

“Our people have demonstrated enormous skill and dedication in their disciplined execution of the Virgin Vision strategy”, Mr Borghetti said.

Group Financial Performance

The Group reported an Underlying Loss Before Tax of $49.0 million for the 2015 financial year, an improvement of $162.7 million on the 2014 financial year. Taking into account 100 per cent of Tigerair Australia performance on a like-for-like basis, the 2015 financial year underlying performance represents a $213.0 million improvement over the prior corresponding year.
The Statutory Loss After Tax for the 2015 financial year was $93.8 million, an improvement of $260.0 million on the prior corresponding period.

Return on Invested Capital for the 2015 financial year was 6.1 per cent, an improvement of 4.7 percentage points on the prior corresponding period.

Total Group Revenue and Income increased 10.3 per cent to $4,749.2 million compared to the 2014 financial year, inclusive of $284.1 million of Tigerair Australia revenue since 17 October 2014.

Group Underlying Cost per Available Seat Kilometre (CASK) reduced 6.4 per cent excluding fuel and foreign exchange for the 2015 financial year compared with the prior corresponding period. Virgin Australia CASK reduced 4.6 per cent excluding fuel and foreign exchange over the same period.

Several major cost reduction initiatives contributed to this result, including Airbus A330 fleet rationalisation, sales channel optimisation, insourced line maintenance, major fuel consumption initiatives and savings in procurement.

The decline in oil prices led to a benefit of approximately $60 million for the Virgin Australia Group, compared with the same period in the 2014 financial year, however this was partly offset by the approximately $35 million negative impact of a weaker Australian Dollar on operating costs. The Group derived a hedging benefit of approximately $31 million in the prior corresponding period which impacted the year on year gain. Based on the Virgin Australia Group’s current hedging position and market rates, the Group expects a fuel pricing net benefit of approximately $162 million in the 2016 financial year. However this is expected to be offset by the approximately $99 million adverse impact of a weaker Australian Dollar, resulting in a total expected net benefit of approximately $63 million in the 2016 financial year.

The Group incurred $70.2 million of restructuring and transaction costs during the 2015 financial year as a result of fleet initiatives, costs associated with various transactions and other transformation initiatives. The business also incurred $27.4 million in hedging ineffectiveness costs and time value movement on cash flow hedges.

The Virgin Australia Group finished the year with a total cash balance of $1,028.5 million and an unrestricted cash balance of $718.9 million, up $244.7 million and $177.9 million respectively on 30 June 2014. The Group’s financial leverage ratio improved from 7.5x in June 2014 to 5.9x in June 2015 and is on track to achieve a further 25 to 30 per cent reduction by the end of financial year 2017.

The Group continues to invest in the latest generation of aircraft to support fuel efficiency, operational performance and customer satisfaction. During the 2015 financial year, the Group converted four Boeing 737-800 deliveries for 2016 into Boeing 737-MAX aircraft. Consequently the Virgin Australia Group will now receive 40 deliveries of Boeing 737-MAX aircraft from 2018 onwards.

Segment Performance

Virgin Australia Domestic

Virgin Australia Domestic reported Underlying EBIT of $111.1 million for the 2015 financial year, an improvement of $210.1 million on the prior corresponding period. Operating margins improved from -3.1 per cent to +3.4 per cent.

Revenue increased by 4.8 per cent on the 2014 financial year on capacity growth of 1.3 per cent, driven by growth in the Corporate and Government, Charter, Interline and Codeshare segments. The business remains on track to reach its target of 30 per cent of revenue from the Corporate and Government segment by 30 June 2017.

Virgin Australia Domestic Yield increased by 5.2 per cent compared to the 2014 financial year; driven by success in attracting increased share of higher-yielding market segments.

Virgin Australia Domestic led the major carriers in On Time Performance for the 2015 financial year, achieving 87.9 per cent of flights on time.

External research confirmed that Virgin Australia Domestic achieved record levels of satisfaction with the end to end customer experience, Domestic Business Class service and the lounge experience. The business also won a number of prestigious awards during the period, including Best Airline Staff Service Australia/Pacific by the Skytrax World Airline Awards for the fifth consecutive year.

In the 2015 financial year Virgin Australia Domestic completed the transition to a contemporary full service airline, including:

  • The rollout of complimentary food, baggage and entertainment across the mainline domestic network;
  • Completion of wireless in-flight entertainment roll-out across the entire Boeing 737-800 and Embraer 190 fleets;
  • Launch of Darwin and Alice Springs lounges, expansion of Brisbane lounge and launch of Premium Exit at Melbourne Airport;
  • A new international standard Business Class service on the Airbus A330s; and
  • The painting of the last red Virgin Blue aircraft in the new Virgin Australia livery.

Virgin Australia International

Virgin Australia International reported an Underlying EBIT of -$68.9 million for the 2015 financial year, a decline of $22.8 million on the prior corresponding period.

Virgin Australia International revenue decreased by 3.3 per cent compared to the 2014 financial year on a capacity decline of 0.4 per cent.

Increased competitive pressure, particularly in the South East Asian and long-haul markets, constrained yield recovery during the financial year.

In recent months, the Virgin Australia Group has put into place the first phase of initiatives to improve the performance of the international business, including introducing Business Class on the Tasman and Pacific Islands routes to drive further unit revenue growth; integrating the management of the New Zealand operations into the rest of the international business; consolidating its Los Angeles flying from three to two Australian hubs; and announcing the introduction of new Business Class suites on the fleet of long-haul Boeing 777 aircraft to drive further yield growth.

As a result, Virgin Australia International has begun to show improvement, with Underlying EBIT improving by $2.4 million in the second half of the 2015 financial year compared to the prior corresponding period.

Today Virgin Australia has announced the second part of the plan to improve performance. This involves launching the Tigerair Australia brand in the short-haul international market, to enable the Group to better cater to the changing dynamics in the region.

It also enables Virgin Australia International to redeploy some capacity to meet increased customer demand on strong-performing routes and to withdraw Virgin Australia International from routes where market structures have changed.

Charter and Cargo

Virgin Australia Charter continued to deliver revenue growth during the 2015 financial year.

Despite the slowdown in the resources industry, demand from Virgin Australia Charter’s existing blue chip client base continued to grow during the 2015 financial year and the business won several significant new resources contracts from competitors. This growth has been supported by the addition of four Fokker 100 aircraft, expanding the charter fleet from 20 to 24 aircraft.

The charter customer experience was also further aligned with Virgin Australia’s mainline operations, including the installation of check-in kiosks and gate scanners at three of its largest charter airports.

Virgin Australia Cargo is the Group’s newest business division. During the 2015 financial year, the Group’s dedicated cargo team implemented a state-of-the-art IT system, which will enable the division to optimise cargo capacity and provide tracking and customised reporting to customers.

The business officially launched on 1 July 2015, providing services for major freight distributors, corporate shippers and individuals. Virgin Australia Cargo has already signed several major clients.

Velocity Frequent Flyer

Velocity Frequent Flyer reported an 18.5 per cent increase in revenue and an 8.0 per cent increase in Underlying EBIT to $81.2 million for the 2015 financial year.

Revenue and earnings growth were driven by record annual growth in members, strong member engagement and new partnerships. Velocity invested significantly in people and systems in the 2015 financial year which will drive stronger earnings growth going forward, with a minimum of 15 per cent earnings growth per annum expected in the 2016 financial year and the 2017 financial year.

During the 2015 financial year, Velocity added the highest number of members since the program’s launch, with an average daily join rate of more than 2,400 per day, up from around 1,900 during the 2014 financial year. This significant increase was supported by Velocity’s Australian-first partnership with one of the country’s largest fuel retailers, BP, with an average of more than 4,300 people joining the program per day during the last quarter of the 2015 financial year.

Velocity continued to achieve numerous awards during the 2015 financial year, including winning three prestigious accolades at the Freddie Awards, in which Velocity has been recognised as having Best Redemption Ability in the Asia-Pacific region for three consecutive years. The program also ranked as number two globally for Seat Availability in the Ideaworks SwitchFly Survey.

In July 2015, Velocity acquired a leader in the data and analytics field, Torque Data, enabling the business to significantly expand its capabilities in this field and support its ongoing growth.

Tigerair logo

Tigerair Australia

Tigerair Australia recorded an EBIT loss of -$8.6 million from 17 October 2014 to 30 June 2015. On a standalone basis, it recorded an improvement of $42.7 million on the prior corresponding period.

The business achieved significant progress in driving incremental revenue growth and delivering cost synergies, with approximately $7 million in benefits achieved as a result of the completion of the Group’s full acquisition of Tigerair Australia.

During the 2015 financial year Tigerair Australia’s average load factors improved by 1.8 percentage points to 86.1 per cent, on capacity growth of 9.6 per cent.

The business introduced a number of initiatives to improve the customer experience while streamlining costs, including check-in kiosks at major airports and an iPad-based mobile app that makes the check-in and boarding process more efficient while enabling additional revenue opportunities. The most recent external survey results show customers were 75 per cent satisfied overall with their Tigerair Australia experience, up 11 percentage points since October 2014.

Tigerair Australia delivered a significant improvement in On Time Performance, with average departures On Time Performance increasing by more than six percentage points during 2015 financial year, finishing the year with 89.0 per cent of flights on time in June and outperforming its major competitor in five of the first six months of the 2015 calendar year .

Conclusion and Outlook

Virgin Australia Group Chief Executive Officer John Borghetti said: “Our people and their dedication to going above and beyond in their day-to-day roles is central to our success in delivering on our Virgin Vision strategy. I would like to thank all of our team members for their commitment to our customers and their tireless efforts in bringing to life the Virgin Vision.

“As a result of the progress on our strategy to date, we are now on a positive trajectory and on track to significantly improve financial performance again for the 2016 financial year.

“Based on current market conditions, all fundamental business metrics are on track for the Group to return to profitability and report a Return on Invested Capital in line with its cost of capital for the 2016 financial year. The Virgin Australia Group’s current cost of capital is approximately 10 per cent”, Mr Borghetti said.

Copyright Photo: John Adlard/AirlinersGallery.com. Tigerair’s Airbus A320-232 VH-VNQ (msn 5218) taxies at Sydney in the new 2013 livery.

Virgin Australia aircraft slide show: AG Airline Slide Show

Tigerair Australia aircraft slide show: AG Airline Slide Show

Tigerair (Australia) route map. The lower-cost Tigerair subsidiary is likely to grow with its lower cost basis.

Tigerair (Australia) 8.2015 Route Map

Virgin Australia proposes to buy the remaining 40% shares of Tigerair Australia for one dollar

Virgin Australia Holdings Limited (Virgin Australia) (Brisbane) issued this proposal today.

Virgin Australia Holdings Limited (Virgin Australia) today (October 17) announced a transaction which would see Virgin Australia acquire the remaining 40 percent of shares in Tiger Australia Airways Pty Ltd (Tigerair Australia) from Tiger Airways Holdings Limited (Tiger Holdings) for a price of A$1.

The transaction, once completed, will see Virgin Australia secure 100 per cent ownership and full control of Tigerair Australia and brings to a conclusion the joint venture between Virgin Australia and Tiger Holdings which commenced on July 8, 2013.

As part of the proposed acquisition, Virgin Australia will secure the brand rights to fly Tigerair Australia to a number of short-haul international destinations, providing new growth opportunities for the business.

Virgin Australia Chief Executive Officer, John Borghetti said: “This proposed transaction marks an important milestone for Tigerair Australia and forms part of the Virgin Australia Group’s Virgin Vision strategy to 2017.

“Given the ongoing subdued consumer demand in the Australian domestic market, the growth of the Tigerair Australia domestic fleet is likely to be reduced. Under this proposed transaction, we will benefit from the economies of scale and achieve profitability ahead of schedule by the end of 2016, by leveraging the resources of the wider Virgin Australia Group.

“Tiger Holdings and Virgin Australia have worked well together over the past 14 months on building a strong operating platform for Tigerair Australia. The joint venture has strengthened systems and processes, increased aircraft utilisation, established a Brisbane base and leveraged synergies across a range of areas.

“We remain committed to maintaining the airline’s low cost business model and the separate Tigerair brand, ensuring that we can continue to deliver the most competitive pricing in Australian budget travel”, Mr Borghetti said.

The partnership between Virgin Australia and Tiger Holdings will continue into the future through brand licencing and certain services which will continue to be provided by Tiger Holdings direct to Tiger Australia.

The transaction is also subject to conditions precedent, including Foreign Investment Review Board approval, Tiger Holdings shareholder approval and entering into long-form licensing agreements, services agreements and other ancillary transaction documents. It is expected that Virgin Australia will consolidate Tigerair Australia’s financial results going forward as result of the transaction.

Virgin Australia anticipates that completion will occur by the end of 2014 and will keep the market updated on the timing of completion of the transaction.

Copyright Photo: Jacques Guillem Collection/AirlinersGallery.com. Virgin Australia will retain the Tigerair brand but the Airbus A320 fleet clashes with Virgin Australia’s Boeing 737s and the pictured Embraer 190s.

Virgin Australia Aircraft Slide Show: AG Slide Show

Tigerair Australia Aircraft Slide Show: AG Slide Show

 

Tigerair signs MOU for 37 Airbus A320neo aircraft + 13 options

Tigerair A320neo WL (13)(Flt)(Airbus)(LRW)

Tigerair (Singapore) has signed a Memorandum of Understanding (MOU) with Airbus for the purchase of up to 50 A320neo aircraft for future fleet renewal and growth. The deal covers 37 firm orders plus 13 options. The aircraft will be powered by Pratt & Whitney PW1100 engines and will be operated by the airline across its Asia-Pacific route network.

Tigerair, established in 2004 as Tiger Airways, comprises three airlines – Tigerair Singapore, Tigerair Mandala (Indonesia) and Tigerair Australia. Collectively, the Group’s network extends to over 50 destinations across 14 countries in the Asia-Pacific region. The Group currently operates an all-Airbus fleet of 48 A320-family aircraft, averaging less than three years of age.
Image: Airbus.
Tigerair (Singapore): AG Slide Show