Virgin To Cancel All International Flights And Reduce Domestic Flights By 50%

Virgin To Cancel All International Flights And Reduce Domestic Flights By 50%
Image: Virgin Australia

Virgin Australia will be suspending all international flights from March 30, as well as reducing its domestic flights by 50 per cent.

The airline made the announcement to the ASX on Wednesday, citing increased travel restrictions and less demand for travel due to the COVID-19 outbreak.

All international Virgin Australia flights will be suspended from March 30 to June 14, 2020, with domestic flights being reduced by half during the same time period. Information regarding which local flights will be impacted across Virgin and Tigerair will be announced next week.

The suspension will equate to roughly 53 planes being grounded between now and June. This includes five Boeing 777, one Airbud A330 and fourteen Boeing 737s from the international fleet.

Until March 30 Virgin will still fly internationally but on a reduced schedule. The primary aim of these flights is to help get Australians and visitors home.

This news comes just one day after Qantas announced a 90 per cent international flight reduction and the suspension of half of its domestic services.

Both Qantas and Virgin are offering travel credits to customers who cancel flights at the present time.

Qantas Cuts 90% Of International Flights, Domestic Flights More Than Halved

On Tuesday Qantas announced enormous cut backs to its international and domestic services in response to coronavirus. Around 150 planes are will be grounded between now and May 2020.

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Is Virgin Australia In Trouble?

While the Federal Government announced a $715 million bailout as part of its COVID-19 stimulus package on Tuesday, Virgin could still be in trouble. S&P Global downgraded the airline to ‘B-‘ on deteriorating domestic market conditions this week, which puts it on CreditWatch Negative.

This essentially means Virgin’s cost of serving its $5 billion debt is higher, putting the company under further financial strain.

“We believe Virgin Australia’s concerted efforts to further reduce capacity, exit-loss making routes, as well as accelerate cost reduction and fleet simplification initiatives – while appropriate – are unlikely to fully offset the cash flow impact of reducing travel demand. As a result, we believe there is an increasing likelihood that near-term cash outflows will increase, and leverage will remain elevated in fiscal 2021,” said S&P global on the ASX.

It’s currently unclear whether this downgrade impacted Virgin’s decision to significantly reduce its active fleet.

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