Virgin Blue to cut flights
June 13, 2008 03:25pm
Article from: AAP
VIRGIN Blue has announced a $50 million package of cost savings and capacity cuts to help offset surging jet fuel prices.
The initiatives are the first outcomes of an ongoing review monitoring global fuel prices, which equate to 35 per cent of the company's cost base.
Virgin Blue sees its current financial year fuel bill rising above $500 million, up 21 per cent on the prior year.
"It's not a case of planning interim measures to offset a spike in the cost of fuel - all airlines must come to terms with a new reality in our industry,'' Virgin Blue chief executive Brett Godfrey said in a statement.
Virgin said effective immediately it will raise airfares by an average of $5 across 55 per cent of its Australian domestic routes.
There also will be an immediate salary freeze for all management positions in the new fiscal year.
"No staff redundancies are necessary as a result of these initiatives,'' Virgin said.
Virgin said other measures include cutting flights and re-routing.
"Virgin Blue will cease its once-weekly Sydney - Proserpine service effective July 2008, however daily connecting services through Brisbane will remain,'' Virgin said.
Virgin will also stop flying its thrice-weekly Darwin to Melbourne direct service, effective from August.
This route would be serviced instead via a daily service through Brisbane, Virgin said.
The airline said it would not reduce services on Trans-Tasman, Pacific Islands and domestic New Zealand routes operated by its Pacific Blue subsidiary.
"Boeing 737 services operated by Polynesian Blue, Virgin Blue's joint-venture airline with the government of Samoa will not be affected,'' it said.
Virgin said the removal of four aircraft from the Australian domestic market would result in a six per cent reduction in planned capacity growth for the next financial year.
It also said it would re-examine loss-making services in the domestic market and look to identify better-performing, new or uncontested markets