Virgin rejects Joyce job cuts rationale

Virgin rejects Joyce job cuts rationale
By admin


Virgin Australia has rejected Qantas accusations that a $350 million foreign capital investment by shareholders “tips the playing field” in its favour, after its rival blamed "distortion" in the Australian market for its decision to shed 1000 jobs. 

Yesterday, Qantas issued a market update which revealed it expects to lose between $250 million and $300 million for the six months to December 31, with chief executive Alan Joyce holding Virgin and its “foreign government-owned” shareholders largely to account.

However, Virgin chief John Borghetti vehemently denied any wrongdoing, branding claims that it has access to cheaper capital as “completely false". He once again insisted the process is a “standard way” for a publicly listed company to raise funds.

“In fact, Air New Zealand and Singapore Airlines, two of Virgin Australia’s cornerstone investors, are both publicly listed companies, not state-owned enterprises, that are expected to make a profit and a return on their investments,” a Virgin statement said. 

“The vast majority of Virgin Australia’s transformation over the past three years has been funded from its own balance sheet, not from foreign government capital as stated by our competitor.”

The carrier reiterated previous arguments that Qantas, as a listed company, could also undertake capital raising and has already done so on nine occasions, raising more than $1.2 billion from global investment markets.

More than half the Qantas share register is in the hands of “large, globally-focused institutional investors”, Virgin added.

Virgin also denied allegations that it had instigated dramatic increases in domestic capacity, insisting it had only added seats to routes “in need” of further competition and frequencies. Qantas, it argued, has added double that capacity in order to maintain its market share.

“Virgin Australia’s strategy is, and always has been, to bring strong competition to all sectors of the Australian market, not to destroy the competition,” the statement said. 

“We want to operate in a competitive environment and will continue to serve the interests of the Australian public.”

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