Fuel bills force Virgin Blue to ground 2 more aircraft

Soaring fuel bills have forced Australian airline Virgin Blue, owned by Richard Branson, to ground two more aircraft. A three per cent reduction in route capacity has brought overall cuts by the airline to 12 per cent since last month.

The airline major is said to be grounding two Boeing 737s from domestic routes by October. Further, it has also managed to ask for a delay in delivery of five aircraft due in 2009 from Brazilian aerospace company Embraer. Australia’s second biggest airline has seen Branson’s Virgin Group becoming its major shareholder this week after logistics group Toll announced plans to offload its 62.7 per cent stake in the ailing carrier. Virgin took a £300 million paper loss on Virgin Blue this year and Sir Richard has indicated he will take a more hands-on approach in future, said news reports. Meanwhile, new baggage fees and a new excess baggage fee have been added in frogrm mid August and September respectively. The measures are seen as an endeavour to recover costs associated with the sky rocketing fuel prices.

Significantly, Virgin Blue’s moves have come close on the heels of Irish budget airline Ryanair deciding to ground 14 per cent of its fleet aircraft for winter and also Qantas, Australia’s biggest airline, deciding to snip 1,500 jobs and abandoned plans to increase flying capacity.

Qantas, incidentally, is cutting jobs than routes. It is feared that about four per cent of Qantas’ workforce will be laid off following the rise in fuel bills. The move may result in 1,500 jobs being cut and also cancellation of plans to hire 1,200 new employees this year. The Australian airline giant feels that by going for the job cuts, it would be protecting its competitive position and the majority of its 36,000 jobs. This in turn would help the airline to grow profitably when conditions improve, it feels.