As Virgin Australia enters new ownership, the airline is planning to reduce one-third of its workforce. This is part of the company’s restructuring as it welcomes new management under Bain Capital, a US multi-asset alternative investment firm. The carrier also intends to reduce some of its aircrafts and would focus on shorter flights. This move is to counter the effects of the coronavirus situation to the company, as demand for international travel shrinks.
Part of cost reduction is slashing out 3,000 jobs, as announced through Australian Securities Exchange on Wednesday. Only 6,000 of their workers would remain by then. Workplace will also be reduced. This is by relocating its Brisbane headquarters in Southbank to share to co-locate with travel agent, Flight Centre, per The Guardian.
According to the company’s statement: “Making these changes now will secure approximately 6,000 jobs once market demand recovers, with potential to increase to 8,000 jobs in the future.”
Virgin Australia also intends to discontinue its low-cost aircraft, Tigerair Australia, among other planes the company plans to remove. Bain Capital wants to cut the carrier’s fleet by half and suspend international flights.
Virgin Australia is the second largest airline in the country. However, it had a rough year. On April the carrier collapsed into administration, and founder Richard Branson appealed for government support which was unsuccessful. On June the major carrier found new owner as Bain Capital outbid Cyrus Capital Partners. Meanwhile, its sister company Virgin Atlantic had recently filed for bankruptcy protection in the US.
Unions are crying out to the government to save the suffering aviation industry from this pandemic. And though the restructuring of Virgin Australia may mean letting go of thousands of employees, the Transport Works’ Union national secretary Michael Kaine said the airline’s restart provided a “glimmer of hope.”
Low demand, slow rise
CEO of Virgin Australia Paul Scurrah forecasts that even if they saw demand for travel akin to pre-pandemic levels, airlines would still “look very different than the way they did previously.” This indicates the need for long-term capital and reduced cost base. For him, rise for demand for international flight would be slow.
Scurrah noted: “Our aviation and tourism sectors face continued uncertainty in the face of COVID-19, with many Australian airports recording passenger numbers less than three percent of last year.”