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Virgin Australia to axe one third of workforce, focus on short haul under Bain

Credit: REUTERS/Loren Elliott

Virgin Australia Holdings Ltd plans to cut a third of its workforce as part of an overhaul to focus on being a short-haul Boeing Co 737 operator under prospective new owner Bain Capital.

By Jamie Freed

SYDNEY, Aug 5 (Reuters) - Virgin Australia Holdings Ltd VAH.AX plans to cut a third of its workforce as part of an overhaul to focus on being a short-haul Boeing Co BA.N 737 operator under prospective new owner Bain Capital.

Virgin said on Wednesday the 3,000 jobs would go as the carrier offloads its fleets of Boeing 777s, Airbus SE AIR.PA A330s and ATR turboprops, as well as low-cost brand Tigerair Australia and its A320s.

"Our initial focus will be on investing in the core Virgin Australia domestic and short-haul international operation alongside our 10-million-member strong Velocity Frequent Flyer programme, continuing to offer an extensive network of destinations, a domestic lounge network and value for money for customers," Chief Executive Paul Scurrah said in a statement.

Virgin's board selected Bain as the winning bidder in late June of an auction that followed the airline's entry into voluntary administration in April.

Creditors, who are owed nearly A$7 billion ($5 billion), are due to vote on the sale by early next month. Unsecured bondholders have said they will propose an alternative debt-to-equity swap, which would also be put to a vote at the meeting.

A deal would need the approval of at least 50% of creditors by both value and number. Employees rank as the largest creditors by number at around 9,000, followed by around 6,000 bondholders.

The coronavirus pandemic was the final straw for Australia's second biggest airline, which had been unprofitable for seven consecutive years.

Larger rival Qantas Airways Ltd QAN.AX has also announced plans to cut at least 20% of its workforce due to the decline in demand caused by the pandemic and associated travel restrictions.

Scurrah said under Bain's ownership Virgin would have a strong balance sheet worth of an investment-grade rating, which it had lacked before entering administration.

Bain said it was backing Scurrah to remain in his role in the future.

($1 = 1.3963 Australian dollars)

(Reporting by Jamie Freed; Editing by Muralikumar Anantharaman and Jane Wardell)

((Jamie.Freed@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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