Virgin cuts seven Tigerair A320s after posting $97m loss

written by Adam Thorn | February 26, 2020

Virgin Australia Group is set to dramatically reduce its fleet by cutting seven A320s from its Tigerair brand by October 2020.

The news came after Virgin Australia chief executive Paul Scurrah announced a $97 million half-year loss, and added the coronavirus outbreak would have a “significant effect” on the business.

Tigerair will soon operate just eight aircraft, less than half the number it had in its ranks two years ago.

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Scurrah said in a statement, “I’m pleased we can accelerate the transition of Tigerair to an all Boeing 737 fleet, which will help get the business into a better financial position moving forward.”

Tigerair will no longer operate A320s, which will now only operate on the Virgin Australia brand

Despite the loss, Virgin announced revenue was 1.5 per cent higher, at $3.1 billion, while revenue per available seat had improved by 2.5 per cent.

The airline is targeting $70 million in savings by cutting 750 head office jobs by the end of the year, and another $50 million through a supplier review.

As part of those changes, Tigerair will also cut five “unprofitable” routes from 27 April: Sydney to Adelaide, Cairns and Coffs Harbour, Melbourne to Coffs Harbour, and Hobart to the Gold Coast.

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Overall capacity will fall by 3 per cent in the second half of 2020 and 5 per cent in 2021, as Tigerair transitions to only operate Boeing 737s by October 2020.

Scurrah said, “Today, we’ve made some important fleet and network changes that will help us improve our financial performance and respond to market conditions.

“There’s no doubt we are operating in a tough market, and we need to make sure our capacity deployment is disciplined to ensure our routes are profitable for our business.

“Coronavirus is having a significant impact on the travel industry and these changes will help us manage the changes we’re seeing in demand.

“We maintain a very strong network of more than 450 destinations between us and our partners and, whilst we have made some announcements to manage costs today, we are as focused as ever on continuing to deliver a great experience for our customers.”

The group has previously announced its withdrawal from the Hong Kong market and short-term capacity reductions on the Tasman in Q4FY20 due to coronavirus and civil unrest.

The seven A320 aircraft cut from Tigerair’s fleet is in addition to the five aircraft exits announced in November 2019, bringing the total to 12. Two Boeing 737s will be transferred from Virgin Australia to Tigerair, to boost numbers.

22 Comments

  • Meepa Chandry

    says:

    Funny how you don’t see CEO salaries being cut!
    The 737 losses money. Just shows that Tigerair and virgin management are fools in charge.

    This is where Jetstar need to swoop in and nab this opportunity for skilled Airbus drivers

    • James

      says:

      Guess that’s why the 737 is so unpopular…..

      You literally don’t know what you’re talking about.

      • Stu Bee

        says:

        Yeah that SouthWest is really struggling with its all B737 fleet……. 😀

    • Rod Pickin

      says:

      Meepa, with respect, you are full on with emotion,, very light if not zero, on fact. Maybe you did not have a top career with either Tiger or Virgin maybe the same with Qantas and or Jetstar but believe me there are a lot of top people trying to make their operations workable and profitable, if you have anything positive to offer them I am sure you will get an audience, – give it a go!

      • Meepa

        says:

        Hello Rod,

        Fishing for savings by axing Tech crew is very cheap way of substituting correct effecient back-end ops change.

        Any idiot can slash staff numbers, so the question is, can you get them back!?

        They are trying to make it work are they? I am sure, but maybe they should do some front line work rather than bean counter decisions that dont take into account the real source of the problems, poor management decsisions from the past, continued on to this very day.

        I agree in his “restructure” but not at the expense of hard to get front line staff. Foolish knee jerk reaction.

        Thats why I said its smart of the Qantas group or another airline swoop in to take advantage of the experienced Airbus pilots….. its just business aint it!? No emotions Rod; Plenty of facts.

      • Rocket

        says:

        With all due respect, we’ve heard that mantra for nearly ten years while this company has been run into the ground by one pathetically inept decision after another.
        The criticism by Meepa is mild compared to what could be said.
        I hope it doesn’t happen for the sake of their thousands of employees but if Virgin goes down the gurgler, emblazoned on its gravestone will be the words “…but we were cash flow positive, going forward…”
        Reason being this is the weasel word piffle that has emanated after every failed attempt to turn a profit.
        The company IS incompetently run and has made multiple inept decisions since 2010. Any expertise is shunned and shown the door, fleets are bought, then grounded, then the flying given to a competitor. It’s laughable.

    • john

      says:

      Meepa,

      Jetstar have too many staff especially pilots.

      & the statement

      “and added the coronavirus outbreak would have a “significant effect” on the business.”

      must be the understatement of the year.

      Many airlines won’t survive. Hong Kong Airlines/Cathay must be hanging on by a thread right now & things are only going to get worse, a lot worse.

  • Leigh

    says:

    “The news came after Virgin Australia chief executive Paul Scurrah announced a $97 million half-year loss, which he blamed on the “significant effect” of the coronavirus outbreak.” That seems a bit of a stretch. The first Coronavirus fatality was in the following half year; in early Jan 2020.

  • Craigy

    says:

    ‘The group has previously announced its withdrawal from the Hong Kong market and short-term capacity reductions on the Tasman in Q4FY20 due to coronavirus and civil unrest.’

    I understand the civil unrest and caronavirus in the Hong Kong market but I didn’t realise it was also an issue in New Zealand.

    Tigerair as a low cost carrier with just 8 aircraft is becoming a joke. Will the A320s’ in Virgin Regional also be retired and replaced with old Virgin B737s’ as well to simplify the fleet across the businesses?

  • Mike

    says:

    As long as I can check that I am not flying on a 737 MAX, I will not change airlines.

  • Peter Ritty

    says:

    Sorry, Tiger will cease to exist, as I forecast before these announcments. They cancel last minute ,delays continualy, their answer operational probs. Their A320’s are old and where are the 737’s coming from apart from virgins leftovers. You have to be desperate to fly Tigerair.

  • John

    says:

    Everyone deserves their own opinion so I respect what all have posted above.
    Personally I think that Tiger is being used as a massive scape goat, Tiger was profitable before VA and this stupid fleet transition. VA on the other hand have been bleeding money for a decade. So why is it that when they do a network review and decide to cut routes, its only Tiger routes that are cut and no Virgin routes or crew ?
    Tiger is already one of the lowest cost bases airlines in Australia, yes the fleet transition needed to happen because it was inherited from previous management. But why would you not then make it a 1 for 1 swap to give Tiger the tools it needs to be profitable. Why as a leisure airline do we do SYD-BNE-MEL and yet we don’t do Sunshine Coast, Ballina, Cairns (reduced), why is it that those routes continue to be plowed by the full cost VA Mainline ?

    Sure slashing Tiger is going to look good on the VA books but it certainly isn’t going to change the fact that it’s VA’s operating costs that are bleeding money, not Tiger.

  • mike

    says:

    I Think the 320’s were always going to be phased out,maybe they tweeked the leases?

  • David Fix

    says:

    I think the 737 is a good airplane and

  • Peter

    says:

    Scurrah said in a statement, “I’m pleased we can accelerate the transition of Tigerair to an all Boeing 737 fleet, which will help get the business into a better financial position moving forward.”

    Yeah so we are supposed to believe making cuts to 8 737’s with NO ability to branch out to other routes will be profitable? Maybe on paper, but in reality, breakdowns, diversions delays will throw Tiger into chaos only people with a lot of time to waste can use!
    I like Tigerair, had plenty of promise but its been pissed up the wall! I dont think this is a clever move at all by Scurrah.

    By the way, that picture is of VARA, who were gifted Tigerair’s A320’s! So they are unprofitable in Tiger but profitable in even smaller numbers in VARA/Perth!!? Come on, seems like Tiger guys have been targeted to save the VA Drivers!!

  • Peter

    says:

    Actually on further reflection just hand the Tiger brand to Alliance Airlines. They’ll turn a profit.

  • RHeaton

    says:

    Virgin have screwed the pooch sadly; Best of luck to the Tiger crew, I really feel for them as they look like they got to be the “fall guy” for mainline considering their profit made in the report!

  • Jack

    says:

    737 ?? Aren’t they not the unsafest aircraft in the world? Go Airbus, you taking in the world! I will never fly 737 so bye to tiger and virgin

    • Stu Bee

      says:

      Is this what Alan Jones told you?

  • Craigy

    says:

    Paul Scurrah made some interesting comments recently about the wide body fleet in that the A330s’ are not economical and they are now reviewing this fleet with a view to replacing it with aircraft that are better fit for their operations. Alan Joyce’s statement last year that the A330s’ are not economical on short east coast legs such as the Mel-Syd-Bne triangle due to the weight and design for long haul flights. The economics does work on the east coast – west coast routes.

    The question is, what aircraft would Virgin replace its wide body aircraft with?

  • Peter

    says:

    Any CEO that cuts jobs without following procedure for the group doing an adjustment, is just chasing bonus’s at the expense of front line workers… yawn, how typical. Wonder if Scurrah’s pay packet was reduced by any chance?

    I feel for the 100+ pilots and 400+ FA’s getting the arse because Virgin cant manage anything properly…. well they can, but its just how to manage screwing things up!

  • Tyron

    says:

    I sense the writings been on the wall for the Virgin Australia group since the messy break up with Air NZ. It has lost access to New Zealand’s domestic network and (Air NZ connecting) passengers as this traffic is almost certainly being funneled through the new tie up with Qantas and Air NZ – a move which is clearly designed to freeze Virgin and any potential new entrants out of the Australasian market. The group needs to get back to basics, cease long haul operations and deploy Tiger as its short haul international operator for key leisure markets (Bali / Tasman/ Pacific Island routes).

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