Virgin Australia shares have opened at a record low of 13 cents per share.
Following a drop of 10.3 per cent in the carrier’s share price from Tuesday to today, Virgin Australia’s Wednesday open was at a 10-year low. The drop comes days after the carrier announced its departure from the Hong Kong route, which chief commercial officer John MacLeod admitted was a challenging market for the airline.
“With a decline in demand following ongoing civil unrest, and growing concerns over the coronavirus outbreak in the wider region, we have made the decision to withdraw services,” he said.
“While the decision to withdraw from the Hong Kong market has been a difficult one, it demonstrates our strong focus on driving greater financial discipline through our network.
“Current circumstances demonstrate that Hong Kong is no longer a commercially viable route for Virgin Australia to continue operating. However, international tourism remains an important part of our strategy through our other international routes and partner airlines.”
Virgin’s departure from Hong Kong, however, comes little over a month out from the carrier’s first flights between Brisbane and Tokyo Haneda Airport, set to take-off from 29 March in time for the 2020 Summer Olympics, hosted in Japan’s capital city.
Today’s dour ASX open represents an 80 per cent drop from March 2010, when Virgin Australia’s share price was at 75 cents per share.
Qantas also saw its share price fall slightly on Tuesday, with the national carrier closing down 0.16 per cent at $6.41.
Virgin Australia’s latest woes follow its August announcement of up to 750 job cuts after the carrier posted a seventh consecutive full-year loss, with $315.4 million for the 12 months to 30 June 2019 – an improvement from its $653.3 million loss in FY18.
Its Velocity Frequent Flyer business, however, saw 13 per cent earnings growth to $132.4 million.
Months alter, Virgin Australia assumed full ownership of Velocity Frequent Flyer after completing its acquisition of Affinity Partners’ minority stake in the lucrative business.
The aviation group announced its intention to buy back its 35 per cent investment of the frequent flyer program from Affinity for $700 million in September, following months of speculation.
At the time, the deal reiterated just how valuable the frequent flyer program remains to Virgin, and airlines more broadly.