- Virgin Australia has reported a full-year loss of $349.1 million
- A total of 750 corporate and head office positions will be cut to restructure company operations
- Despite challenging conditions, total group revenue was up 7.6 per cent to $5.8 billion
Virgin Australia has reported that it will cut 750 corporate and head office positions in an aim to restructure after it posted a full-year loss of almost $350 million.
Despite challenging market conditions in the second half of the financial year, however, its total group revenue was up 7.6 per cent to $5.8 billion. Virgin’s cash balance was also up $324.5 million to sit at $1.7 billion.
In May, Virgin warned that earnings would fall by at least $100 million and swing to a loss of $35.6 million or lower. However, the result came in worse than predicted, with an underlying loss of $71.2 million. Statutory loss after tax was also down $315.4 million.
As part of the subsequent company restructuring, Virgin said it plans more closely integrate the functions of Virgin Australia Airlines, Virgin Australia Regional Airlines, and Tigerair — combining them into one single corporate team.
All routes will also be reviewed in the company’s network in a bid to lower costs and use all aircrafts more efficiently.
These losses mark the seventh year in a row Virgin has posted an annual loss, and it claims these job cuts will save $75 million in costs by the end of FY20.
Virgin Chief Executive Paul Scurrah, who was appointed in March to replace John Borghetti, said that while these job cuts would impact the remaining staff, they are needed to improve financial performance.
“Today we have announced a number of changes to help drive business improvement. This includes a restructure. of our leadership team to take in group-wide accountability across all brands, a reduction of 750 roles from our workforce, a review of all supplier contracts and agreements, and a fleet and network review which will see a tight focus on capacity management going forward,” Paul said.
“I am acutely aware of the impact this has on our team members. However, if we are to position the business for the future, create new opportunities, improve competitiveness, and continue to deliver for our customers, we need to make tough but important decisions,” he said.
One of Paul’s first achievements as Chief Executive was to free up cash by delaying the delivery of roughly $2.5 billion worth of new Boeing 737 Max jets.
Virgin, which did not declare a final dividend, noted that there had been a “continuation of softer conditions” at the start of July.
Shares are down almost 10 per cent this morning, trading for 15 cents apiece in a $1.393 billion market cap.