SYDNEY (BLOOMBERG) - Virgin Australia Holdings, the airline backed by China's HNA Group, announced 750 job cuts and a wide-ranging operational review after reporting a seventh consecutive annual loss. The shares fell to a decade-low.
The job losses, which affect almost 8 per cent of the airline's total workforce, will shrink corporate and head office staff, Virgin Australia said in a statement on Wednesday (Aug 28). It plans to review its fleet and routes, and will cut some international and domestic flights. All contracts with suppliers are also being reassessed.
The shake-up is new chief executive officer Paul Scurrah's attempt to make the airline commercially viable. Virgin Australia has already pushed back delivery of its first Boeing 737 Max jet by almost two years. Mr Scurrah's mission is further complicated by a slowing domestic economy, rising fuel costs and a weaker Australian dollar.
Virgin Australia stock lost as much as 1.5 Australian cents, or 9.1 per cent, to 15 cents at 10.24am in Sydney. That's the lowest level since 2009. Virgin Australia is among the most thinly traded of the publicly listed airlines, with a free float of less than 10 per cent.
The airline's A$349.1 million (S$326 million) loss for the year ended June was "disappointing and underscored the need for change", Mr Scurrah said in the statement. "We must improve our financial performance."
Virgin Australia's ownership structure is almost unheard of among modern-day airlines. HNA, Nanshan Group, Etihad and Singapore Airlines each own about 20 per cent of the carrier and no single investor has ultimate control. Virgin Australia in February finally ditched the idea of a privatisation to end years of speculation that shareholders would attempt a buyout.