Virgin Australia will temporarily ground its entire international fleet and cut domestic capacity in half.
In a statement to the Australian Securities Exchange, the airline said it had made the decision due to increased government travel restrictions and impacts on travel demand due to coronavirus (COVID-19).
“We have entered an unprecedented time in the global aviation industry,” Virgin Australia CEO and managing director Paul Scurrah said.
“[That] has required us to take significant action to responsibly manage our business while balancing traveller demands and supporting the wellbeing of Australians.”
As a result, Virgin Australia has made the decision to temporarily suspend all international services from 30 March to 14 June – including its inaugural Brisbane to Haneda service – grounding the equivalent of 53 aircraft, the airline said.
Domestic operations, which account for 88 per cent of passengers and 78 per cent of Virgin Australia’s revenue, have been cut by 50 per cent. Scurrah advised the airline would maintain most domestic routes and instead focus on reducing frequencies in its flying schedule.
Between now and 29 March, Virgin Australia said it would operate a reduced international schedule to allow Australians and visitors to return home, with the group to work closely with the federal government to prioritise these journeys.
Virgin Australia said it would also aim to avoid redundancies by fast-tracking accrued leave, leave without pay and redeployment, but said in some cases job losses would be the outcome.
“The changes announced today will affect our people and we are having constructive discussions with team members and relevant unions,” Scurrah said.
“The Virgin Australia Group is focused on ensuring we manage the business through this difficult period and maintain a strong and competitive aviation in Australia for the years to come.”
The group currently sits on a cash position in excess of $1 billion, with no significant debt maturities until October 2021, and no new aircraft deliveries until July 2021.
Previously, Virgin advised it would temporarily reduce chairman and independent board director fees by 15 percent and remove executive bonuses to offset impacts to the company.
The announcement comes as the federal government prepares to sign-off on a $715 million relief package for Australian airlines, which involves the refunding and ongoing waiving of a range of government charges on the industry.
Virgin said the route and schedule detail of changes across Virgin Australia and Tigerair Australia is currently being worked through and will be published over the next week.
In addition, the grounding will see the postponement of Virgin’s inaugural Brisbane to Haneda flight from 29 March, and the airline’s Melbourne to Denpasar service.
Virgin has set up a “dedicated customer care hub” on its virginaustralia.com website to deal with specific customer queries and travel changes.
Furthermore, guests with new or existing domestic and international bookings through to 30 June 2020 are entitled to change their flight to a later date or a different destination, or both, without incurring a fee.
Guests who no longer wish to travel can also cancel their flight and receive a travel credit.