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.
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.”
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.
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.