Virgin Australia to cut flights, reduce capacity

VIRGIN Australia will retire five aircraft and reduce its carrying capacity by 2 per cent as the airline focuses on returning to profitability.

Australia's second-largest airline will remove unprofitable routes and refocus Tigerair, its low-cost carrier, on key holiday destinations as the group reduces network capacity by 2 per cent in the first half of next year.

Virgin Australia Group directors and executives faced shareholders in Brisbane today for the first time since it delivered a "disappointing" $315.4 million statutory loss for the 2019 financial year.

The company's Melbourne to Hong Kong route has been cut, while the airline will launch a Brisbane to Tokyo service in 2020.

Virgin Australia CEO Paul Scurrah addresses shareholders at the company's annual general meeting in Brisbane. Pic: (AAP Image/Dan Peled)
Virgin Australia CEO Paul Scurrah addresses shareholders at the company's annual general meeting in Brisbane. Pic: (AAP Image/Dan Peled)

Virgin will also stop flying between the Gold Coast and Perth from January 19.

"Flying to the right destinations, with the right customer demand, and the right-sized fleet will improve our financial performance," Group CEO Paul Scurrah said.

Virgin Australia is attempting to return to profit by slashing 750 jobs from the airline and reviewing supplier arrangements in moves expected to save $75 million and $50 million respectively.

Mr Scurrah, in his first annual general meeting with the airline, declined to provide an earnings guidance or financial outlook for the company and cited "elements that are outside our control" such as fuel headwinds as reason for not providing the guidance.

"We'll make sure all of the measures we can control are in far better shape next year and drives us towards profitability," Mr Scurrah said.

Virgin Australia chairman Elizabeth Bryan addresses shareholders. Pic: (AAP Image/Dan Peled)
Virgin Australia chairman Elizabeth Bryan addresses shareholders. Pic: (AAP Image/Dan Peled)

 

Pushed by a shareholder on when the airline would return to profit, group chairman Elizabeth Bryan declined to provide details.

"We can't give you timelines and we can't give you estimates," she said.

Mr Scurrah said the 2 per cent network capacity reduction showed the company was acting to remove costs.

"Capacity management and cap constraint is a very important profit lever in the organisation," he said.

Virgin's lack of earnings guidance is in contrast to Qantas, which in September recorded a periodic revenue increase of 1.8 per cent to $4.56 million.