Virgin set to experience turbulence following recent net loss

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Virgin Australia has announced this week a program to cut 750 head office and corporate roles after posting a $349 million full-year loss. The result is a surprising drop for Virgin following their slender thing profit of $64 million the previous year. The plan to slash jobs is estimated to save the airline $75 million annually in costs. The cuts would impact seven per cent of Virgins current workforce.

On top of labour costs Virgin has advised it would be making an urgent assessment of all its current routes and capacities to see where further savings can be made. It’s expected there will be a strong focus around leisure routes. The move would ensure better route profitability for the airline.  Virgin has also decided it would hit pause on fleet renewal until July 2021.

The recent loss has not made new VA CEO Paul Scurrah’s life any easier since he landed into the tough job following the departure of John Borghetti. The new CEO pointed to tough trading conditions as well as rising fuel and the lower Australian dollar.

The news follows rival Qantas posting earlier this month a 6.5 per cent fall in annual net profit. Like Virgin they attributed the loss to higher oil prices and a weaker foreign exchange.

 

 

Lufthansa Group expands its wings on seven new routes

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I always love an expansion rather than a rescind from an airline, so when an airline as great as Lufthansa says it wants to spread its wings further, I’m all ears! This week the German airline announced it’d be undertaking some significant transatlantic expansion from during the US summer in 2020.

Lufthansa will be launching three new routes, two of which will be within the USA and one interestingly into Bangalore. All three routes will be operated by A350-900 aircraft. One of the USA routes, the Seattle leg will fly 6x weekly flights between Munich and Seattle (except Thursdays) whilst the airline will also fly into Detroit 5x weekly flights from Munich. Finally the airline will launch 5x weekly flights between Munich and Bangalore, which is aimed to support capacity demand from the Frankfurt – Bangalore route.

Additionally Lufthansa Group has announced three new routes for its budget airline, Eurowings. There had been talk in the sector of the airline being withdrawn from a number of routes so the news here of an expansion for Eurowings is surprising but welcomed. The new route for Eurowings are the following:

  • Frankfurt to Phoenix – 5x weekly flights
  • Frankfurt to Anchorage – 3x weekly flights
  • Munich to Orlando – 3x weekly flights
  • Munich to Las Vegas – 2x weekly flights

The news is exciting and I’m quite curious to understand the thinking behind the expansion into some of these destinations, particularly Detroit and Anchorage. The fact that they will be serviced by A330s and A350s means that the fleet will be generally fresh and the standard quite high. As usual, time will tell if the expansion plan for Lufthansa Group pays off.

Will you be flying Lufthansa on any of their newly announced routes? I;m keen to hear your thoughts. 

 

Qantas launches new Frequent Flyer Program changes

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Qantas a couple of days ago without notice announced cryptically that it would be overhauling its frequent flyer program. Like many I was in a bit of a sweat about it thinking the potential was endless for the airline to come in with the wrecking ball and make the program to be frank, a lot worse. Today, I am glad to report that it isn’t anywhere near the doom and gloom that was reported online. So what has been announced and how will it affect you?

First up Qantas has announced there’ll be more seats up for grabs, with those dreaded carrier charges on most international Qantas flights reduced by as much as half. This is a big win for many as the carrier charges for QF currently have a large sting to them compared to their rivals when redeeming. You” require fewer Qantas Points when booking an economy seat on international flights but here’s the sting. Those looking to book something with a bit more leg room will be hit with higher amount of points for seats in premium economy, business class and first class.

The next bit of news is something I was apart of in terms of research late last year by the airline and this is the Qantas Points Club. Details are still sketchy but basically the Qantas Points Club will operate adjunct to the Qantas Frequent Flyer scheme, unlocking flight and travel benefits for non-flying members including lounge access and bonus status credits. I think this has a lot of potential and am keen to see how it is delivered when it is launched December 2019.

Thirdly Qantas has earmarked five million seats on Qantas domestic and international flights annually, with up to 30% more premium economy, business class and even first class seats to popular destinations such as Singapore, London, Los Angeles and Tokyo. This is on top of 3-5 million seats on partner airlines, including new partners such as Air New Zealand, KLM Bangkok Airways and Air France.

Finally Qantas has opened up a new level of lifetime status, the coveted Lifetime Platinum but the catch is, to achieve it, it’s an eye watering and almost impossible 75K status credits to achieve. The new Lifetime Platinum status will commence in September 2019.

So what do you think of the announcement? Anything that excites or annoys you? Keen to hear your thoughts…