Virgin Australia will cut one-third of their workforce, as Bain Capital has shed more light on the future of the airline. Under the plan, unveiled by CEO Paul Scurrah, 3000 employees will be made redundant. Furthermore, Virgin’s budget subsidiary, Tigerair, will also cease operations.
Virgin Australia 2.0 will be a “value airline,” centred around domestic and short-haul international flights. Speaking to reporters, Mr Scurrah expressed regret over the decision, but deemed it a necessary one.
All Aircraft Except B737 to Go
Under the plan, Virgin Australia will ditch their ATR 72-600s, Boeing 777s, Airbus A330s and A320 aircraft. The airline will operate just Boeing 737-800 aircraft, as they attempt to move to a lower-cost model. Southwest has adopted this model, only operating B737s, and has seen huge success in the United States.
By ditching their ATR aircraft, Virgin Australia will inevitably axe some regional routes. CEO of Bain Capital, Mike Murphy, had previously said that Virgin would expand their regional network. However, Paul Scurrah has said that the ATR fleet was not profitable. Speaking on a conference call, he said that Virgin will continue to serve some regional airports with B737’s.
“…but it does mean because we’re exiting the ATR, there are quite a few routes that we will not be continuing with. We are currently reviewing options to continue servicing those routes previously flown through a number of different mechanisms,”Paul Scurrah (transcription via ABC News)
International Routes to Remain Suspended (For Now)
Australia’s borders are closed, meaning that Virgin Australia will not resume any overseas services until such time that they reopen. When that time comes, Mr Scurrah said that nearby overseas destinations, such as New Zealand and Bali, Indonesia, will likely receive Virgin flights.
Beyond nearby countries, Virgin Australia will not be flying to Los Angeles or Hong Kong for some time or possibly never. However, Mr Scurrah did hint that if the opportunity arises, services to Japan or the US “will see something very positive”.
In the near future, Virgin Australia will be serving 40+ airports with high-frequency flights. This will help Virgin 2.0 compete with Qantas on elusive business routes. Furthermore, the airline will continue to serve 18 regional centres throughout Australia with B737s.
No More Tigerair
Although Virgin Australia has made Tigerair pilots and cabin crew redundant, it has now been confirmed that the budget airline will cease operations. However, Virgin will retain Tigerair’s Air Operator Certificate, in case a similar low-cost carrier can be revived when the market dictates.
All Virgin travel credits and Velocity frequent flyer points will be retained under the Virgin 2.0 plan.
Article Sources: ABC and News.com.au