Virgin Australia will dump its low-cost airline Tigerair and take a knife to more than 3000 jobs as the coronavirus pandemic crushes aviation.
In an update lodged to the Australian Stock Exchange on Wednesday morning, Virgin said it would discontinue Tigerair Australia and suspend all long-haul international fights.
Virgin scrapped the low-cost carrier due to a lack of demand to support two brands within Australia’s aviation market.
The company said it would retain its air operator certificate to give it the option to bring back a low-cost carrier in the future “when the domestic market can support it”.
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READ NOWThe company will cut 3000 roles from its 9000-strong workforce as part of a simplification strategy.
Virgin Australia will remove ATR, Boeing 777, Airbus A330 and Tigerair A320 aircraft from its fleet.
Virgin Australia entered voluntary administration in March after the grounding of the aviation industry due to COVID-19.
At December 31, 2019, Virgin owed $5.1 billion in debts and was running at a deficit, with the airline posting an interim loss $88.6 million.
Private investment group Bain Capital entered into a binding sale agreement for the embattled airline in an attempt to restructure the business and make it profitable.
Virgin Australia chief executive Paul Scurrah said the aviation industry continued to face uncertainty, with passenger numbers less than 3 per cent compared with last year.
“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,” he said.
Virgin flagged it will consolidate the size of its Brisbane headquarters, moving from its Bowen Hills building to an office space on Grey St in Brisbane’s South Bank district.
Bain Capital will continue Virgin’s Velocity frequent flyer program, with all points and travel credits carried forward under the new ownership.
“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,” Mr Scurrah said.
Australian Services Union said the “staggering” number of job losses would cripple Australia’s aviation industry.
“This is absolutely devastating for Virgin workers – about one in three workers will be made unemployed at the height of this crisis when it is hardest to find work,” ASU assistant national secretary Linda White said.
Virgin said it would still offer a two-class cabin offering and maintain its domestic travel lounges.