The Virgin Group has appointed a new executive leadership team, simplified its structure and announced it will cut 750 head office and corporate staff as it reviews operations in the wake of a big loss for the 12 months ended 30 June 2019.

The group yesterday reported an underlying loss before tax of AUD 71.2 million and a statutory loss after tax of AUD 315.4 million for the financial year.

The operation will cut 750 corporate and head office jobs from a total staff of about 10,000. Virgin Australia Group chief executive and managing director, Paul Scurrah, said the staff cuts would save about AUD 75 million a year. Most of the 750 staff affected will have left the business by the end of the 2020 financial year, he said.

Virgin wants to eliminate duplication among different sectors of the group. It may prune capacity and/or routes. Aggressive pursuit of corporate business may also be in the wings, analysts believe.

A new chief financial officer, chief commercial officer and chief operations officer will join the group as part of a new executive leadership team.

Virgin Australia Tasman service

The appointments include:

  • Chief financial officer, Keith Neate;
  • Chief operations officer, Stuart Aggs;
  • Chief commercial officer, John MacLeod;
  • Chief experience officer, Danielle Keighery;
  • Chief legal and risk officer, Dayna Field;
  • Chief people and culture officer, Lucinda Gemmell;
  • Chief executive officer, Velocity Frequent Flyer, Karl Schuster;
  • Company secretary, Sharyn Page.

A chief strategy and technology officer will also be appointed.

Scurrah said the new group structure would integrate the corporate, operational and commercial functions of Virgin Australia Airlines, Virgin Australia Regional Airlines and Tigerair Australia into single functions and points of accountability, with each executive leader accountable for driving business outcomes for the group and maximising the value of the brands.

Virgin Australia A330-200

Velocity Frequent Flyer is excluded from this change due to its current ownership structure.

ABC News noted that while Virgin Australia group reduced its net loss from an even-bigger AUD 681 million last year, its underlying performance, excluding one-off costs and gains, was “substantially worse”. Virgin’s underlying loss before tax of AUD 71.2 million compares to the previous year’s profit of AUD 64.4 million.

Rising fuel costs and a lower Australian dollar have not helped Virgin.

Scurrah said in a statement that the results “were disappointing and underscored the need for change.

“There is no doubt that we are operating in a tough economic climate with high fuel, a low Australian dollar, and subdued trading conditions. However, today’s results show that we must improve our financial performance. While we have continued to grow revenue and have a strong loyal customer base, we need to make changes to our costs to ensure we see financial benefit from the growth in our business,” Scurrah said.

“Today, we have announced a number of changes to help drive business improvement. This includes a restructure of our leadership team to take in group-wide accountability across all brands, a reduction of 750 roles from our workforce, a review of all supplier contracts and agreements, and a fleet and network review which will see a tight focus on capacity management going forward.

“It’s important to note that we have already addressed a number of other business priorities including the restructure of our Boeing 737 MAX order, which deferred a significant amount of capital expenditure.

“Regarding the reduction of our workforce, I am acutely aware of the impact this has on our team members. However, if we are to position the business for the future, create new opportunities, improve competitiveness, and continue to deliver for our customers, we need to make tough but important decisions that are in the long-term interests of the group.

“These are just some of the strategic decisions that have been made to help in the short-term. However, there’s more work we need to do on the long-term focus and positioning of the business. We will be focused on being the best value airline for both the corporate and leisure traveller, offering the strong and unique Virgin experience and proposition that we know will appeal to all market segments.

“As I’ve said previously, key to our success is ensuring we strike the right balance between the interests of our team members, customers and our shareholders. We’ll be focused on delivering for all three groups.”

Written by Peter Needham