Virgin Australia Ltd. Chief Executive Officer John Borghetti Launches New Business Class Suite
Virgin Australia Ltd. Chief Executive Officer John Borghetti Launches New Business Class Suite

How years of cash losses gave debt-heavy Virgin the blues

QUEENSLAND carrier Virgin Australia could join failed airlines Ansett and Impulse on the aviation scrapheap just months shy of celebrating its 20th birthday.

Seven years of financial losses totalling more than $1 billion left the carrier with little breathing room last month when the COVID-19 pandemic grounded flights.

Virgin Blue launched on August 31, 2000 when its first flight, 'Disk Jockey 214', was farewelled by Sir Richard Branson in Brisbane on its way to Sydney.

With a fresh brand, the low-fare carrier launched in Queensland - thanks largely to a lucrative $10 million package from Premier Peter Beattie - with one route, two planes and 200 people.

The Virgin Australia Holdings Ltd. logo is displayed on the tail of an Airbus SAS A330 aircraft at Sydney Airport in Sydney, Australia, on Monday, Aug. 17, 2015. Virgin Australia launched its new business-class suites for its A330 fleet. Photographer: Brendon Thorne/Bloomberg

Virgin Blue expanded over the next decade to deliver record profits and carry millions of passengers before, in 2010, it made the fateful decision some industry commentators attribute to its demise.

Virgin Blue rebranded to become the more mature Virgin Australia and with the appointment of new CEO John Borghetti, moved to steal business passengers from Qantas.

In 2013, two years after launching business class, Virgin expanded its lounges and upgraded airport facilities while recording a $98 million loss.

Six consecutive years of nosediving financial performance, including a whopping a $653.3 million loss in the 2018 financial year, would follow before Mr Borghetti departed the airline and Paul Scurrah arrived.

Former Virgin Australia Group CEO and Managing Director John Borghetti. (AAP Image/Dan Himbrechts)
Former Virgin Australia Group CEO and Managing Director John Borghetti. (AAP Image/Dan Himbrechts)

 

The new managing director, who had experience at Queensland Rail, Flight Centre and Tourism Queensland, was undergoing a cost-cutting and company-wide review when the COVID-19 pandemic arrived in February.

Within weeks most of the 133 Virgin Australia Group aircraft were grounded and thousands of workers stood down to preserve the airline's cash reserves.

It has been a baptism of fire for Mr Scurrah, who concedes there have been many sleepless nights as he attempts to pull Virgin Australia back from the brink and allow it to celebrate a 20th birthday in August.

Originally published as How years of cash losses gave debt-heavy Virgin the blues



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