Virgin Airlines will stand down about 8000 of its 10,000 strong workforce and has suspended the operations of Tigerair in response to the coronavirus pandemic.
The announcement will hit many more residents of St George and Sutherland Shire, who work in the aircraft industry, and follows last week's announcement two-thirds of Qantas and Jetstar's 30,000 workers would be stood down.
"With state border closures escalating across Australia, the group has needed to take further action that will see the suspension of most of its domestic flying from midnight Friday 27 March until 14 June 2020," the company said in a statement.
"This is in addition to the group's decision to temporarily suspend international flying from 30 March to 14 June 2020, and close all Virgin Australia operated lounges across the network.
"Despite the dramatic steps taken to respond to market conditions, we recognise our role as a key part of the nation's travel industry and will work with government to maintain vital domestic routes for the transportation of essential services, critical freight and logistics operations.
"We will also continue to assist customers in reaching their destinations as state borders tighten and will continue to support them with any future travel requirements."
The statement said 80 per cent of the workforce would be temporarily stood down until at least the end of May.
"During the stand down, team members will be able to access accrued leave entitlements, but for many team members, leave without pay will be inevitable," the statement said.
"The group is working with more than twenty-five partners to identify short and long-term redeployment options.
"As a matter of priority, and to streamline and safeguard the Group's domestic and short-haul international businesses through COVID-19, the company will commence consultation on a proposal to close its New Zealand cabin crew and pilot base, and its Tigerair Australia Melbourne pilot base."
CEO and managing director Paul Scurrah said, "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.
"We are now facing what will be the biggest grounding of aircraft in this country's history.
"From the end of this week, we will begin repositioning and grounding more than 125 aircraft in our fleet, suspending almost all our domestic and international flying until at least the middle of June.
"I know our people have been working tirelessly to help guests get home ahead of the various state travel restrictions and their efforts should be applauded as they adapt to a rapidly changing environment.
"We plan to return Tigerair Australia and Virgin Australia to the skies as soon as its viable to do so, however I am mindful that how we operate today may look different when we get to the other side of this crisis.
"My focus has been on guiding this company through the crisis, and at the same time ensure the business is set on a sustainable path when the recovery eventually comes.
"I am only too aware of how much our people are hurting at the moment and these very tough decisions have weighed heavily on me and my leadership team. We are talking to our teams and we are working hard to do what we can to protect jobs and extend payments for as long as possible."