A nosedive for Virgin Australia

A nosedive for Virgin Australia

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Virgin Australia has been battling a seven-year war to get out of the red, make some money at very least manoeuvre away from its shares trading at a near all-time low. After more “disappointing” full-year results released by the airline’s new chief executive officer Paul Scurrah yesterday. What can Virgin Australia do to stop its year on year, back-to-back nosedive?

Drastic action is needed which could include:

  • Axing services to Los Angeles, Bali and some regional cities

  • Ditching the Tigerair brand

Virgin Australia announced it would review every single route on its network, as well as cut 750 jobs, as part of a drastic restructuring to bring back a full-year loss of AUD 349.1 Million The removal of employees is set to save the airline $75 million by the end of the 2020 financial year.

Mr Scurrah, who only took over the reins as CEO from John Borhetti in March and is the third boss since the airline entered Australian airspace in 2000. After six years of losses and a total of AUD 1.2 billion down the drain, the former Queensland rail boss has five weapons to help bring the airline back from the brink.

  1. Cut Costs

  2. Restructure management

  3. Rebrand (Including Tigerair)

  4. Review routes and end any loss-making flights

  5. Tighten control over the loyalty division

But how did Virgin Australia get here?
Virgin Australia set out on a course to become a head to head competitor with Qantas. They invested enormously when they weren’t a profitable business. They tried to be the Qantas alternative focusing on expensive lounges and provide certain service levels when they were having losses. In early days Virgin Australia was a very different model being a low-cost carrier.

When Ansett Airlines folded in 2001 somebody said ‘we can nibble off what they previously had against Qantas’ and that’s what Virgin chased. They wanted to get in with corporate and business customers but were doing it at a time when they were losing money. Or could be said as “They took on a war they didn’t have without the soldiers or ammunition to fight it.”

A new change that has begun testing is cutting down the service announcements. They are reducing the number of times they interrupt people to make it a better experience.

Do you think Virgin Australia will be able to recover back to being normal?

  • Yes
  • No

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If yes or no why or how?

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