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Virgin Australia to Axe 3,000 Jobs, Retire Widebody Planes and Tigerair Brand

Virgin Australia to Axe 3,000 Jobs, Retire Widebody Planes and Tigerair Brand

Virgin Australia is to lay-off 3,000 employees, retire its long-haul fleet of Boeing 777 and Airbus A330 jets, and dispose of its ultra-low-cost Tigerair brand as part of a major restructuring following the airline’s decision to enter voluntary administration in April. The Brisbane headquartered airline says its new business plan, led by Bain Capital, will focus on “core strengths” and help re-establish itself as an “iconic Australian brand”.

“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,” explained Virgin Australia chief executive Paul Scurrah.

“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,” he continued.

For now, the new Virgin Australia will focus on domestic and international short-haul operations using an all Boeing 737 fleet. That means smaller ATR, as well as widebody jets like the Boeing 777 and Airbus A330, will be permanently decommissioned. Airbus A320 aircraft operated by Tigerair will also be retired, along with the brand itself.

Scurrah says Virgin Australia remains committed to long-haul international flying but for now, tough ongoing travel restrictions mean the airline will indefinitely suspend flights to Los Angeles and Tokyo. They could, though, be restarted when “sufficient demand returns”. It’s not clear how the airline would restart long-haul flights after disposing of its widebody jets.

The future of Tigerair also remains unclear. Bain Capital believes there’s simply not enough demand for both Virgin Australia and Tigerair but it will retain its air operators certificate just in case there’s the demand for an ultra-low-cost carrier at some point in the future.

For frequent flyers, positive news comes in the form of an announcement that any outstanding travel credits, as well as frequent flyer miles will be carried forward into the new Virgin Australia.

The U.S.-based private investment firm Bain Capital was chosen by Virgin Australia’s administrators to move forward with a new business plan for the embattled airline in June. Virgin Australia had received interest from a number of parties, including the Queensland government who wanted to invest in the airline to keep its head office in Brisbane.

The airline today announced its intention to consolidate its offices into one base in the centre of Brisbane.

“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,” Scurrah said of the airline’s new owners on Wednesday.

Even before the COVID-19 pandemic, Virgin Australia was financially stressed after a series of bad business decisions and a failed investment from Abu Dhabi-based Etihad Airways. The Corona crisis accelerated what many analysts saw as an inevitability.

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