Virgin Australia says revival plan could cede domestic market share to Qantas

FILE PHOTO: A Virgin Australia Airlines plane is seen at Kingsford Smith International Airport the morning after Australia implemented an entry ban on non-citizens and non-residents intended to curb the spread of the coronavirus disease (COVID-19) in Sydney, Australia, March 21, 2020. REUTERS/Loren Elliott/File Photo

SYDNEY (Reuters) - Virgin Australia Holdings Ltd VAH.AX expects to lose domestic market share to rival Qantas Airways Ltd QAN.AX under its new business plan as it exits unprofitable routes, its chief executive said on Wednesday.

“I do expect we will lose market share because there are routes that weren’t making any money,” Paul Scurrah said at the CAPA Australia Pacific Aviation Summit.

“There will be markets where we do want to hold our own,” he said. “We are looking at it market by market rather than nationally.”

Qantas last month said it expected its domestic market share could rise to 70% from its pre-pandemic level of 60% as the market recovers because Virgin is reducing the size of its fleet.

Virgin entered voluntary administration in April owing A$7 billion (3.85 billion pounds) to creditors, who are due to vote on a proposed purchase by U.S. private equity group Bain Capital on Friday.

Under Bain's business plan, Virgin would cut a third of its workforce as part of an overhaul to focus on being a domestic and short-haul international Boeing Co BA.N 737 operator.

Scurrah said the airline plans to have 30 to 60 737s in operation in the next 12 months, depending on market conditions.

“We’re not putting numbers on the starting fleet,” he said. “We need to be flexible. With the arrangement with lessors we can do that.”

Reporting by Jamie Freed; Editing by Tom Hogue and Christopher Cushing