Virgin Australia sets path to reemerge amid ongoing COVID crisis

Virgin Australia has announced plans to exit voluntary administration, with jobs cuts, losing the Tiger brand and a focus on customer value and new digital platforms

Virgin Australia will cut 3000 jobs, drop the Tiger brand and restructure as it begins the path out of voluntary administration under new owners, Bain Capital.

The plan announced to the ASX focuses on six key areas to be rejigged for a leaner operation. On the business side, the airline will overhaul its cost base and simplify everything, which will see it move to an all-Boeing 737 fleet. Supplier contracts will be reviewed, its building footprint will shrink and long-haul flights will continue to be reduced in line with coronavirus restrictions.

Virgin Australia Group CEO and MD, Paul Scurrah, said demand for domestic and short-haul international travel is likely to take at least three years to return to pre-COVID-19 levels, with the real chance it could be longer.

"This means as a business we must make changes to ensure the Virgin Australia Group is successful in this new world," he said.

On its decision to drop the Tigerair brand, the airline said there isn’t enough customer demand to support two brands at this time. However, Virgin will retain Tiger's flying permit and resources with an eye on the future if the local market can support another low-cost carrier.

Focus on customers

Scurrah said the initial focus will be on investing in the domestic and short-haul international operation along with its frequent flyer program. The airline noted it will carry over all travel credits and Velocity frequent flyer points.

“We'll continue to offer an extensive network of destinations, a domestic lounge network and value for money for customers,” he said.

Over the past 12 months, the airline said it has worked to unlock its culture and harness the spirit of its people and it will continue to focus on customer service as it moves forward. 

It has also announced a comprehensive digital re-platforming of both the airline and the frequent flyer program with the aim of improving commercial capability, guest experience and the employee experience towards growth.

“Even when we do see a return to pre-COVID-19 levels of travel, successful airlines will be influenced by demand and look very different than the way they did previously, requiring long-term capital, a lower cost base and be more focused on providing exceptional experiences through a combination of great people and world class technologies,” Scurrah said.

Follow CMO on Twitter: @CMOAustralia, take part in the CMO conversation on LinkedIn: CMO ANZ, follow our regular updates via CMO Australia's Linkedin company page, or join us on Facebook: https://www.facebook.com/CMOAustralia

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