Virgin Australia Holdings Ltd <VAH.AX> said on Wednesday it was cutting 90% of its domestic capacity, temporarily grounding 125 aircraft, and putting 80% of its employees on leave until at least the end of May as demand plummets due to the coronavirus.
The moves at Australia's No. 2 airline will affect 8,000 workers and all operations of its low-cost subsidiary Tigerair Australia will be suspended. It had already grounded all international flights. Leave without pay will be inevitable for many employees, the company said.
The domestic and international suspensions will last from March 27 to June 14 and it will look to pause key supplier agreements. It is also looking to close its New Zealand cabin crew and pilot bases and its Tigerair Australia pilot base in Melbourne.
"We plan to return Tigerair Australia and Virgin Australia to the skies as soon as it is viable to do so. However, I am mindful that how we operate today may look different when we get to the other side of this crisis," Virgin Chief Executive Paul Scurrah said in a statement.
The Australian government has advise against non-essential domestic travel and several of its states and territories require arrivals from other parts of the country to self-isolate for 14 days, leading to a plunge in domestic demand.
"There has never been a travel environment in Australia as restricted as the one we see today and the extraordinary steps we've taken have been in response to the federal and state governments' latest travel advice," Scurrah said.
Rival Qantas Airways Ltd <QAN.AX> last week said it would place two-thirds of its 30,000 workers on leave as it slashed capacity. Its international fleet will be grounded but it has also warned this week of the potential for further domestic cuts due to the growing travel restrictions.
(Reporting by Jamie Freed; Editing by Sandra Maler and Lisa Shumaker)
