Virgin Australia is reducing its fleet as well as planning fewer flights amid cancellations on international and domestic routes due to the coronavirus.
The airline says the coronavirus outbreak is currently expected to negatively impact the group’s earnings by $50 million to $75 million in the second half.
The update came as it posted a $88.6 million net loss in the first half of FY20 compared to a net profit of $73.8 million after buying all of its Velocity Frequent Flyer program, writing off assets and workforce reductions.
Virgin Australia group chief executive Paul Scurrah said the half year has seen revenue and passenger numbers grow but the group is still in the early stages of transitioning the business to a lower cost base.
“There’s further work to do on costs and we will continue to review the network and our capacity in line with demand,” he said.
Seven aircraft will cease flying by October 2020, in addition to five already announced in November 2019.
Virgin has decided to withdraw from Sydney-Hong Kong route due to a decline in demand following prolonged civil unrest and uncertainty around the coronavirus outbreak.
It says it will also reduce capacity on the Trans-Tasman and Cairns routes, in the short term, due to dwindling demand caused by the coronavirus.
Further route and frequency changes will result in a group capacity reduction of three per cent by the end of FY20, as part of its focus on improving profitability and cashflow, Virgin says.
There will be no new planes until July 2021 due to the deferral of the Boeing 737 MAX.
Virgin Australia posted a first half revenue of $3.118 billion for its first half compared to $3.07 billion in the prior corresponding period.
AAP
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