Virgin boss warns more jobs likely to go without JobKeeper extension

Virgin Australia chief executive Jayne Hrdlicka has said the airline may be forced to cut more jobs if the JobKeeper wage subsidy is not extended beyond March.

Feb 04, 2021, updated Feb 04, 2021
Virgin Australia CEO Jayne Hrdlicka has revealed her personal tragedy after the death of her husband. (File image).

Virgin Australia CEO Jayne Hrdlicka has revealed her personal tragedy after the death of her husband. (File image).

The airline, which was sold to private equity player Bain Capital for $3.5 billion at the end of last year, had previously revealed plans to make about a third of its workforce redundant, with about 3,000 jobs expected to go.

About 6000 staff remain at the airline, but half have been stood down until states fully reopen borders and domestic travel ramps up.

In an interview with The Business, Hrdlicka said the jobs of the 3000 stood down workers could be at risk if there was no extension to JobKeeper while the situation with domestic travel remains uncertain due to the COVID-19 pandemic.

“If we’re not able to support them in idle, basically ready to come back the minute the borders open and we’ve got more demand in the marketplace, then we have a very difficult time being able to be responsive to borders,” Hrdlicka said.

She noted that due to safety rules and procedures it took time to get staff back up and running.

“We can shut capacity off, but building capacity back up is pretty tough,” she said.

“It [does not take] a couple of days to hire people train people … it’s several months.

Hrdlicka said the airline was still at about 35 per cent capacity, when she had hoped to be at about 60 per cent at this time.

Without a crystal ball to predict when borders reopen and how effective the rollout of vaccines would be, she said the airline would have to “make tough decisions that don’t weaken the balance sheet”.

“We will have to make tough decisions on how many people we can afford to keep on the books when we don’t have any guarantee of the borders being open,” she said.

Hrdlicka was hopeful the Federal Government would step in with industry-specific assistance for aviation workers by either extending JobKeeper or with some other form of support.

“We are vital to the Australian economy,” she said.

“We’re doing everything we can to ensure we can maintain the flexibility to get every one of you [Virgin workers] back to work.”

Hrdlicka previously told ABC News that a revamped Virgin Australia would target the “mid-market” and there will be no nasty changes to the airline’s Velocity Frequent Flyer program for its 10 million members.

She said the airline was investing heavily in technology and cutting back its lounges.

Governments have pumped $130 billion into keeping airlines afloat, but many have already collapsed and more will follow with big consequences for the cheap overseas travel we’ve become used to.

But the pathway to profitability is a long one, with regional airline Rex vowing to fight hard for the budget travellers market and take on lucrative routes where Virgin intends to make a comeback.

Hrdlicka told ABC’s The Business that she was not worried about REX cutting in on their turf, and that ticket “prices will be cheaper than they’ve been in a long time” as long as airlines have the ability to keep staff employed.

“We’re fighting fit and I don’t buy the fact that REX will come into the market with a structurally better cost position than either Jetstar or Virgin,” she said.

“It will be a very competitive market for some time and we’re up for the challenge.

“We will be working very hard to ensure that we are competitive.”

Hrdlicka said Virgin was still negotiating with cabin crew and pilots on outstanding enterprise agreements, but had thus far worked constructively with their unions, who she previously had a rocky relationship with during her previous role as Jetstar CEO.

“I think were quite aligned [with the unions] because the priority is getting people back to work as soon as possible,” she said.

“We need to work together to ensure that the cost structure of the business enables as many people to be able to come back into employment as possible.”

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