Virgin Australia axes 750 jobs

Terry Cook

In a bid to slash costs amid deepening international competition across the airline industry, Virgin Australia announced a major restructure of its operations late last month. The carrier will merge corporate and operational functions at its domestic, regional and international businesses, as well as those of its low-cost subsidiary Tigerair. Virgin is jointly owned by HNA, Nanshan Group, Virgin Group, Etihad Airways and Singapore Airlines.

The immediate consequence of the restructure is the axing of 750 jobs, or around 7 percent of the company’s workforce, to achieve savings of $75 million a year. Around 30 percent of the job losses will be at the company’s head office and will target corporate and administration positions.

The Australian Services Union (ASU), which covers the affected workers, has already made clear it will enforce the mass sacking. It is only seeking a meeting with Virgin representatives to discuss “proposed time-frames and measures to avoid or reduce the adverse effects of the changes on employees.”

Virgin has also said it intends to put the squeeze on its suppliers in a bid to extract a further $50 million in savings. The company is aiming to further reduce capacity, on top of the 1.5 percent reduction over May and June this year, and has signaled it will be “reviewing all routes.”

Last month’s announcement came in the wake of Virgin posting a $349 million full-year loss, its seventh straight year of losses despite having grown its revenue base 7.6 percent to $5.8 billion. Virgin has chalked up losses of almost $1 billion in the past two years and well over $2 billion since it remodeled itself in 2011 from a low-cost domestic carrier to a more upmarket operation, with business class provision and international routes, in a bid to challenge Qantas.

The latest restructure and job cuts have been initiated by Virgin’s new CEO Paul Scurrah, who was appointed to the position in late March. At the time, Scurrah was hailed by the airline’s board for his “significant leadership in driving transformation and improving customer satisfaction in complex and challenging businesses.” In other words, he is highly valued for his experience in imposing vicious cost-cutting measures at the direct expense of workers.

Scurrah was previously the CEO of port company DP World Australia and Queensland Rail, as well as executive general manager at Flight Centre. All of those enterprises have undergone major restructures over the past period, slashed jobs and stripped working conditions.

Announcing the Virgin restructure, Scurrah declared: “This may involve potential withdrawals from certain markets which are uneconomical for us.” He also stated he would “not rule out further job losses or route cancellations.” Declaring his focus was returning to profitability, he stated: “We’ll make the right decisions, as tough as they might be.”

There is now speculation that further reorganisation could mean the end of Tigerair. The subsidiary has its own management and operational structure, but a fleet of just 15 aircraft. The low-cost carrier posted a loss of $45 million.