Posted on: 29 August 2019 by Glenn Sands
The Virgin Australia Group, the parent company to the second largest airline in Australia has reported an AUS$315.4 million loss within the last year. This is the seventh consecutive year of losses for the airline. To deal with the current financial crisis, which is compounded by the rise in fuel prices and currency exchange rates, the company is implementing cost saving measures which includes 750 job cuts.
Virgin Australia Group CEO Paul Scurrah called the result “disappointing”. Despite the company’s continuously growing revenue and customer base described as “strong and loyal”, Scurrah sees the need to improve financial performance, in particular, by cutting costs to “see financial benefit from the growth.”
To cope with the increasing losses and issues it’s facing, Virgin Australia is looking for cost-saving solutions. The airline will undertake a capacity, network, fleet and supplier review, planning to remove some “elements” of its short-haul international and domestic network. It is also planning to simplify the structure of the airline from the top down. Under this initiative the company is planning to reduce its corporate and head office staff by 750 at a cost saving measure of AUS$750 million per year. Additionally, by reviewing current aircraft lessors, airports and other suppliers’ agreements will help save “at least” a further AUS$50 million.
But fuel and foreign exchange rates are anticipated to grow by another AUS$100 million in FY2020, the company predicts.
Scurrah took over as Virgin Australia Group CEO and MD in March 2019.