Virgin Australia shares fell 6% to 15.6 cents yesterday after the company revealed plans to sack 750 back-office workers over the next 8 months and make every attempt to return to the black as quickly as possible.
New CEO, new broom, new guidance, lower profit, kitchen sink to come? Sound familiar? Well, that’s what we got from Virgin Australia on Friday morning and it raises questions about the health of the domestic and international aviation markets.
Virgin Australia has slashed its order of 38 Boeing 737 Max 8 jetliners by 15 to 23 (a cut of nearly 40%) despite more talk from US aviation circles that the troubled airliner could be back flying in June.
The company has announced a pre-tax profit of $14m for the first quarter versus a loss of -$4m in the prior corresponding quarter. The highlight was a 9% increase in the Virgin brand domestic unit revenue, UBS observes.
The December trading update revealed a weaker-than-expected finish to the year. UBS notes a continued deterioration in profitability and trading conditions appear more challenging than previously thought.