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Old 14th Sep 2020, 22:54
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Virgin 3.0

Virgin head office jobs face axe

  • The Australian
  • 15 September 2020
Virgin Australia has warned that its recovery plans have been “severely impacted” by Victoria’s COVID-19 and ongoing border closures, informing staff the airline was likely to make up to 250 head office positions redundant.

In a note to staff on Monday, Virgin chief executive Paul Scurrah said the aviation industry was “in the midst of the worst crisis” it had ever faced.

“Our cash management throughout this period is absolutely critical,” Mr Scurrah wrote.

“One of our largest costs is labour, and with much less transitionary work required as the administration process is coming to an end and without the revenue coming through the door, we simply cannot justify the number of team members who are currently stood up.”

The redundancies will be the second since the airline was purchased by private equity outfit Bain Capital after it fell into administration in April as the coronavirus pandemic shuttered airports and left planes stranded.

Virgin announced earlier this month it would make a third of its workforce — about 3000 people — redundant.

Mr Scurrah, who has remained the company’s chief executive through the Deloitte-run administration, said staff who had been stood down were likely to remain so until March next year, a position that would be reviewed in January.

“Consultation will occur immediately for roles which are identified as no longer being required as a result of the smaller operation and reduced work,” Mr Scurrah wrote.

“We expect around 150 roles to be impacted in addition to the 250 head office roles that have recently been impacted within the operations division.”

But Virgin will also begin a comprehensive review of the way head office works, with Mr Scurrah suggesting it would be redesigned “to suit a smaller, simpler operation”.

“The reality is this will also have the regrettable impact of further job losses,” he wrote.

“I’m aware that for many of you will feel like we have already done this … last year. “However, the world and our business have significantly changed since then, which must be addressed.”

Virgin last week permanently shut down its Tigerair budget brand after 13 years, although it will retain the air operator certificate so it can revive a low-cost carrier when the domestic travel market has recovered.

As part of Bain Capital’s plan, Virgin will simplify its fleet and largely operate Boeing 737s, removing ATRs, Boeing 777s, Airbus A330s and Airbus A320s.

Virgin’s larger rival, Qantas, has also made significant job cuts this year. Most recently, it announced 2500 positions across Qantas and its Jetstar brand would be made redundant, on top of 6000 jobs cut in June.

Qantas last month recorded a $2bn loss as the coronavirus pandemic pushed full-year revenue down by 21 per cent.

Qantas shares ended up three per cent on Monday at $3.94.

Bain Capital, which offered $3.5bn for Virgin, has had the backing of the Transport Workers Union after the private equity group gave commitments to keep the airline as a full-service carrier and not switch to a low-cost model.

Mr Scurrah told staff on Monday it was “clear that the impacts of various government decisions to deal with COVID continue to subdue demand for flying”.

“With our current capacity sitting at around 10 per cent, which is supported by federal government subsidies to ensure some limited transportation infrastructure remains functional, the outlook has never been less certain,” he said. “Regrettably, we must again take action to address the impact of this ongoing crisis on our business.”
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