Virgin boss credits staff for success 

Source: ONE NewsVirgin Blue airline

Virgin Blue chief executive Brett Godfrey says staff pay cuts and cost reductions have ensured the airline's survival during the toughest aviation period since World War II.

Godfrey told a Queensland Media Club luncheon in Brisbane on Thursday that eight and half out of 10 new airlines fail within the first 12 months.

He said Virgin Blue has been successful because it continually evolved.

The global recession, human swine flu and forecasts showing global airline losses of $US9 billion, almost double March estimates of $US4.7 billion, have created a rough year for airlines.

Godfrey said Virgin Blue came close to shedding staff but managed to avoid it because of innovative initiatives.

"Managers have led the way with 20 to 30% pay cuts and staff have also rallied and agreed to things such as 12 months leave without pay," he said.

"For nine years this culture and attitude has meant we have not lost a single minute to industrial unrest, not like our major competitors."

He said cutting costs, such as striking better deals with suppliers, also greatly helped.

"Shedding staff is very expensive. First there is the cost of redundancies and then there is the cost of rehiring and retraining when you do decide to turn the corner," Godfrey said.

"The cost of large scale slash and burn of assets and people is negative (because) it lowers service standards right at the exact time when your loyal customers have the most incentive to try out the competition."

He said Virgin put their staff first, then sales and then shareholders.

"I spend most of my time on staff and people because we know if we do that right they'll take care of the sales, which is the guest, and those sales will look after the shareholders."