Virgin Australia stops all flights except essential services

Virgin Australia Holdings Ltd. furloughed 80% of its 10,000-strong workforce and said it will only keep flying for essential services as restrictions due to the coronavirus eviscerate demand for travel. Shares rose.

Domestic capacity will be cut by 90% as 125 aircraft are grounded, with flights retained only for essential services, critical freight and logistics, the airline said in a statement Wednesday. Its Tiger Australia budget division will be suspended immediately. The group had already announced its intention to suspend all international flights from March 30 to June 14.

“There has never been a travel environment in Australia as restricted as the one we see today and the extraordinary steps we’ve taken have been in response to the federal and state governments’ latest travel advice,” Chief Executive Officer Paul Scurrah said. “We are now facing what will be the biggest grounding of aircraft in this country’s history.”

The airline’s action comes days after Qantas Airways Ltd. idled two-thirds of its 30,000-strong workforce and scrapped all international flights in response to the outbreak. Airlines are struggling to cope with a near complete halt in bookings as the virus sweeps across the world and triggers flying bans.

Virgin Australia’s shares rose as much as 23% in early trading, the biggest gain in almost two weeks. Still, the stock has more than halved in value this year.

Virgin Australia staff will be able to access accrued leave, or go on leave without pay. The airline is also working with partners to find other employment options.