Virgin Australia, which describes itself as a “[predominantly] domestic airline”, has made further cuts to its international network.
It now expects to reduce international capacity by 8% instead of 4.8% in the second half of 2020, and 10.3% in the first half of 2021.
Over the same period, group capacity will be reduced by 6% instead of 3% in July to December, and 7.7% in the six months thereafter.
The airline states that it is “insulated from some of the broader international impacts” as its domestic operations account for 88% of passengers and 78% 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.”
Routes affected include Brisbane-Tokyo Haneda that will begin on 29 March, Sydney-Los Angeles, as well as trans-Tasman services from Auckland to Melbourne and Sydney. The carrier will also cease operations from Auckland to Tonga and Rarotonga, starting May and July, respectively.
“The group will continue to assess any impact from Covid-19 and respond with relevant changes as conditions evolve.”
Virgin is also suspending earnings guidance for the current financial year “due to ongoing uncertainty of the Covid-19 situation.”
It disclosed a cash position “in excess of A$1 billion ($629 million), with no significant debt maturities until October 2021 and no new aircraft deliveries until July 2021.”
The carrier states that it is seeking relief on government charges, and at the corporate level, will remove management bonuses for the current financial year (FY), while board members will temporarily reduce fees by 15%.
A hiring freeze is also in place, while base salaries of non-enterprise agreement staff will not be increased. All non-critical capital expenditures have been put on hold, along with decreased marketing spend.
This is in addition to previously announced job cuts, affecting 400 roles by the end of March, and another 350 by June.
Group chief executive and managing director, Paul Scurrah, says: “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.”
He adds: “These measures announced today are intended to soften the impact from Covid-19 and safeguard our company for the future.”
Despite that, domestic travel appears to be a bright spot, as Scurrah highlights that Virgin’s travel bookings to various leisure destinations within Australia “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,” he says.
