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.
Etihad Airways really is starting to become a shadow of its former, glamorous self. The airline when it took to the skies was full of promise and was in fact ground breaking at one point. Lately Etihad announcements are something I dread as they have been the last two years about news of removing or cancelling product and/or aircraft. Today’s disappointing announcement from Etihad is the removal of one of their popular A380 services to Sydney, which will be replaced by a Boeing 777-300ER on an ongoing basis from July 2019.
Previously Etihad announced that flight EY451 and the EY450 return leg would revert from the current short-term Boeing 777 and back to to its flagship Airbus A380 in May.. Ssdly Etihad has had a rethink of this and decided to keep the change permanently.
The downgrade in aircraft means those set to fly the A380 will need to review their booking, especially those in business as the B777 possesses the last generation business class seat as well as lacks the pizzazz of a onboard bar area. Those in first will also be affected with the 777s first suites no match for the spaciousness of the A380s. Moreover those seeking a shower best wait til they land because the inflight shower is not on the B777 aircraft.
Coincidentally the announcement and date of it removal aligns with Etihad’s launch of the A380 between Abu Dhabi and Seoul.
Personally if you are flying a premium class I would make the switch. B777s are a horrid aircraft; noisy, lacking space and generally disappointing.
Will you be switching aircraft if your booking has landed on the new B777 aircraft? Kene to hear your thoughts.
After announcing via Twitter they’d be offering priority boarding to veterans in Australia, Virgin Australia has partially backflipped on their decision after strong public backlash. The airline has stated that “over the coming months, we will consult with community groups and our own team members who have served in defence to determine the best way forward. If this process determines that public acknowledgement of their service through optional priority boarding or any announcement is not appropriate, then we will certainly be respectful of that.”
The Virgin Australia announcement was an odd one to begin with. Perhaps they thought the gesture would earn them some good PR but then again Virgin needs to better understand its customer base, and it isn’t America. Having flown internally within the USA many times I find the gesture a little cringeworthy, if not smacks of commercialism. How can we put a price on death and war? Every ANZAC day commercial businesses are criticised if they utilise the dya for profit, so why is it any different here? Moreover if Virgin had done its research it would know that Australian veterans and our service men and women do not seek attention. Australians are more respectful and do not act patriotically around war like America. Whatever the case Virgin has dug itself in a deep hole and it is dangerous for an airline already on its knees.
What saddens me is that the announcement was done as part of a campaign by NewsCorp, the same lovely folk who brought you the campaign to fire Malcolm Turnbull,. NewsCorp don’t care about people, they care about their agenda and in this case are probably trying to cover their tracks from recent blunders. The organisation’s intent is tokenism at its worst and Virgin sadly fell into its trap.
Here’s hoping Virgin Australia learn from this tough lesson and consult before making surprise announcements.
Should Australia be going down the path of the USA and recognise veterans at the airport/ on the plane? Keen to hear your thoughts.
Virgin Australia has had a bit of a rough trot of ate with the New Zealand market after one time ally Air New Zealand decided to bin their partnership and get into bed with rival Qantas. The move left Virgin in shock and probably a little ill prepared in terms of a response. Now Virgin has found a trick up its sleeve by announcing this week it would commence flights from Newcastle to Auckland from November this year.
The new seasonal route which will tap into summer passenger demand will feature a Boeing 737 with eight business class seats, 30 Economy X seats and 138 standard economy seats. The flights will run every Tuesday, Thursday and Sunday from 22 November 2018 to 17 February 2019.
Departing from Newcastle Airport at 7.30pm on Tuesday, Thursday and Sunday is VA199, which will reach Auckland at 12.25am the following day. VA198 will depart Auckland at 5.10pm and arrive into Newcastle at 6.45pm.
The news from Virgin comes on top of the airlines recent announcements that it was launching new routes between Sydney and Wellington and between Melbourne and Queenstown from October this year.
It’ll be interesting to see the demand for these new routes and whether the investment was worth it considering no other airline is flying a direct Newcastle – NZ option. Like all ambitious ideas time will tell if the gamble was a success.
What do you think of Virgin’s lastest routes to NZ? Will you be using the new Newcastle – Auckland route?
This week’s best kept secret in the aviation sector goes to the resignation of Virgin Australia CEO John Borghetti. The catch is he won’t be stepping away effective immediately but will stay for another two years, with his contract expiring 1 January 2020.
The early announcement was made so that Virgin was given ample time to headhunt a new leader and allow a smooth transition.
Having spent 45 years in the aviation industry, Mr Borghetti was appointed as Virgin CEO on 8 May 2010. Previously he was Qantas’s executive general manager for six years but made the move to Virgin after he lost the CEO leadership opportunity to rival Alan Joyce.
The news whilst somewhat surprising is not at all unexpected. Virgin in recent years has struggled turning a profit with the company posting a loss of $220 million for the full year ended 30 June 2017.
In addition the loss of key partnerships has hit the company hard with the Air New Zealand divorce and Qantas-Air New Zealand partnership announced recently in its place being the final straw in his downfall.
It will be interesting to see where Virgin heads from here. It is a very tough act for anyone to navigate and I will give Borghetti some kudos where it is due as it would not have been easy. That said Virgin does need a strong and decisive future, something that has not been evident lately with the company in a confusing budget/ premium model mindset.
Whatever the case the next couple of years will be key to Virgin’s future.
What do you think of John Borghetti’s resignation? Do you think he acted in the best interests of the company or was this a poor decision at a time when they needed him most?