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Virgin Australia cuts coronavirus losses

Virgin Australia cuts to its flight network are being blamed primarily on the coronavirus.

While the world works out how to combat coronavirus (Covid-19), countries have responded by closing borders and quarantines are being enforced. Corporate travel has been impacted in some regions, but according to Virgin Australia, it’s the leisure destinations where demand is weaker.

Capacity will be down three per cent in the second half of the 2020 financial year, including the suspension of Virgin routes from Hong Kong to Sydney and Melbourne.

Five unprofitable Tigerair routes will also be withdrawn:

  • Melbourne-Coffs Harbour from 27 April 2020
  • Sydney-Coffs Harbour from 27 April 2020
  • Adelaide-Sydney from 27 April 2020
  • Sydney-Cairns from 27 April 2020
  • Hobart-Gold Coast from 28 April 2020

The airline is expected to reduce its overall capacity by up to five per cent by the 2021 financial year. The Virgin Australia cuts will include the trans-Tasman flights.

“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,” says Virgin CEO and managing director Paul Scurrah.

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

According to Business News Australia, “Virgin Australia reported group statutory losses after tax of $88.6 million, which includes one-off costs associated with the $700 million buyback of its Velocity Frequent Flyer program, write-offs of assets no longer in use, and workforce reductions.”

“Despite the loss, Virgin saw its revenue hit a new record, growing by $46.8 million to reach $3,116.3 million”, Business News Australia reported today.

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