InDaily InDaily

Support independent Journalism Donate Subscribe
Support independent journalism

Business

Virgin Australia to cut fleet and jobs

Business

Virgin Australia plans to raise $852 million and sweep the broom through its operations by cutting its aircraft fleet and workforce.

Comments
Comments Print article

Australia’s second-biggest airline plans to use the capital-raising proceeds to pay down debt and improve its operations following a three-month review of its finances.

The $852 million is on top of a recently announced $159 million share placement, which will give Virgin $1.01 billion in new equity capital.

“Our renewed capital structure will strengthen our balance sheet, provide additional liquidity and help fund initiatives to improve earnings and cash flow,” chief executive John Borghetti said today.

Virgin will target operational and capital efficiencies, which will further deepen its focus on having a low, sustainable cost base, Borghetti said.

“Going forward, we will continue to stay focused on delivering an excellent customer experience to travellers in Australia and around the world.”

Borghetti declined to provide figures on the number of expected job losses.

Virgin shares fell almost 12 per cent in morning trade following the announcement, dropping 3.5 cents to 26 cents at 1126 AEST.

Under Virgin’s cost-cutting plan, the group will cut its smaller fleet of ATR turboprop aircraft and remove all of its E190 aircraft from its fleet over the next three years.

Virgin said the fleet changes will assist the group in simplifying its business and becoming more “scalable and productive.”

The airline recently struck agreements with two Chinese companies, aimed at improving its financial and strategic position.

As a result, Virgin will be more than one-third owned by China’s HNA Group and the Nanshan Group.

Virgin expects net free cash flow savings to increase to $300 million annually by the end of fiscal 2019 as a result of the proposed cost cutting.

But the group expects cash restructuring costs of $200 million to $250 million, along with non-cash balance sheet impairments of $150 million to $200 million over the period to June 30, 2019.

-AAP

Make a comment View comment guidelines

Local News Matters

Media diversity is under threat in Australia – nowhere more so than in South Australia. The state needs more than one voice to guide it forward and you can help with a donation of any size to InDaily. Your contribution goes directly to helping our journalists uncover the facts. Please click below to help InDaily continue to uncover the facts.

Donate today
Powered by PressPatron

Comments

Show comments Hide comments
Will my comment be published? Read the guidelines.

More Business stories

Loading next article
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]
[class^="wpforms-"]