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Virgin cuts flights, freezes spending as virus bites

VIRGIN Australia will drastically cut flights, freeze some spending and ask staff to take leave as it responds to the growing coronavirus crisis.

It comes as a Virgin Australia cabin crew member has been diagnosed with COVID-19.

 

Virgin Australia has announced flight cuts and cost measures due to coronavirus. Picture: Brendan Radke
Virgin Australia has announced flight cuts and cost measures due to coronavirus. Picture: Brendan Radke

 

 

The group will double its planned capacity reduction, from 3 per cent to 6 per cent in the second half of this year, and increase to 7.7 per cent between July and December.

Routes to Los Angeles, Japan, and Trans-Tasman services will be reduced.

The additional reductions in capacity and cost measures come after the global travel industry recorded a significant decline in bookings during the past two weeks due to the rapid spread of COVID-19 and consumer uncertainty surrounding overseas travel.

Virgin's domestic operations account for 88 per cent of passengers and 78 per cent of its flight revenue.

 

 

 

Domestic capacity will be cut by 5 per cent, an increase on the 3 per cent previously planned.

Services that will be reduced are mainly on markets that have multiple daily frequencies.

Internationally, Virgin's Brisbane to Tokyo Haneda service will launch on March 29, but be reduced from a daily flight to three times per week May 3.

The daily Sydney to Los Angeles service will fly five times per week from early May to early June.

Virgin's changes come several days after national carrier Qantas announced a 25 per cent reduction of its capacity due to lower demand.

 

Paul Scurrah, CEO, Virgin Australia Group at Brisbane International Airpor. (AAP Image/Claudia Baxter)
Paul Scurrah, CEO, Virgin Australia Group at Brisbane International Airpor. (AAP Image/Claudia Baxter)

It has also moved to further cut costs in the wake of lower revenue.

In addition to the 750 job losses announced in August, Virgin will also ask for relief on government charges, lower its marketing spend and stop all discretionary spending and non-critical capital expenditure.

Leave initiatives including asking staff to take accrued annual leave or unpaid leave, or reducing standard working hours, will also occur.

Director fees to the chairman and independent board director will be reduced by 15 per cent and management bonuses have been dropped.

 

 

Virgin Australia said guests wanting to change their travel due to COVID-19 had options.

"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 fees," a spokesman said.

Guests with changes to their bookings will be contacted directly with alternative travel arrangements, including refunds for any routes that the group is no longer flying.

 

 

Virgin Australia Group CEO Paul Scurrah said the the company was "disciplined" in managing capacity and continuing to reduce costs.

"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," he said.

"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."


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