Finance Finance News Virgin to slash 750 jobs after posting $350m loss

Virgin to slash 750 jobs after posting $350m loss

virgin australia in financial strife
Virgin Australia has posted a "disappointing" full-year loss of $349.1 million. Photo: Getty
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Virgin Australia will review its flights and slash 750 jobs after posting a “disappointing” full-year loss of $349.1 million.

The airline said it would restructure its operations and look at everything from how it uses its planes to individual routes after posting its seventh annual loss.

Wednesday’s figures came despite Virgin’s revenue for the year to June 30 rising 7.5 per cent to $5.83 billion.

The company warned in May that its full-year results were likely to be $100 million down on the previous year because of weakened demand and uncertainty in the market.

The results are an improvement on the previous year’s $653 million loss, but it is still Virgin Australia’s third-worst performance.

Virgin, which said on Wednesday it had endured a “challenging trading environment” in the second half of the financial year, will cut head office and corporate positions as it tries to save $75 million in costs by the end of the 2020 financial year.

Virgin Australia’s action plan

Source: Virgin Australia

The company said it would more closely integrate the functions of Virgin Australia Airlines, Virgin Australia Regional Airlines and Tigerair Australia.

“There is no doubt that we are operating in a tough economic climate with high fuel, a low Australian dollar and subdued trading conditions,” Virgin Australia chief executive Paul Scurrah said.

“Decisions which have a direct impact on people’s livelihoods are never made lightly and I regret the need to reduce the size of our workforce so quickly.

“However, today’s financial results tell us loud and clear that we need to reduce costs.”

A strategic review would consider changes to the Virgin Australia fleet, routes and agreements with airports to further reduce costs.

“The group intends to further reduce flying across elements of its short-haul international and domestic network to meet demand and maximise route profitability, and expects H1 FY20 capacity growth to be negative,” it said.

In April, Virgin cut its order for the grounded Boeing Max 737s from 38 to 23. Mr Scurrah said on Wednesday that had deferred “a significant amount of capital expenditure” – reportedly about $2.5 billion.

The company also announced the appointment of Keith Neate as its new chief financial officer on Wednesday. He will start on September 2.

Virgin, which did not declare a final dividend, noted there had been a “continuation of softer conditions” at the start of July.

Virgin shares were worth 16.5 cents before the start of trade on Wednesday.

-with AAP