Tigerair cuts flights as virus hits tourism

VIRGIN Australia is slashing its Tigerair fleet and cutting back on flights to rein in costs as the coronavirus cruels demand for leisure destinations and its budget airline’s routes.

The airline says cancellations and dwindling demand in the short term due to the coronavirus outbreak will hit earnings by

$50 million to $75 million in the second half.

Virgin Australia made a net loss of $88.6 million for the six months to December 31 compared to a $73.8 million profit a year ago.

The net loss attributable to owners was $97.3 million compared to a profit of

$54.8 million.

The weaker result also reflected the cost of buying all of its profitable Velocity Frequent Flyer program, writing off assets, paying more for fuel and labour, and after workforce reductions.

Group chief executive Paul Scurrah said revenue and passenger numbers grew in the half year 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.

Virgin Australia will reduce capacity across the group in the second half of FY20 by 3 per cent as cancellations rise and forward bookings drop, largely for leisure destinations and Tigerair routes.

Seven Tigerair A32O jets will cease flying by October, in addition to the previously flagged exit of two A32Os and three Fokker 100s.