Virgin Australia has stood down about 8,000 of its 10,000 workers until at least the end of May and further slashed domestic flight capacity in the wake of the coronavirus border restrictions.
The airline on Wednesday said its domestic schedule would now be cut by 90 per cent, from last week's 50 per cent reduction and it would also suspend all flights of its low-cost Tigerair Australia service.
Virgin said it would try and redeploy workers and encourage them to use leave, but leave without pay would be inevitable for many.
Most domestic flights will be suspended from March 27 until June 14, while its previously announced international ban will be in place from March 30 to June 14.
The remaining domestic flights will provide essential services, such as carrying critical freight.
Virgin's move comes after most states imposed restrictions on people crossing their borders.
The rules aim to further limit movement and control the spread of the virus. People travelling for work and medical reasons will be allowed to cross borders.
"We are now facing what will be the biggest grounding of aircraft in this country's history," Virgin Australia chief executive Paul Scurrah said.
More than 125 planes in the Virgin fleet will be grounded from the end of this week.
The business is also discussing closing its New Zealand cabin crew and pilot base, and its Tigerair Australia Melbourne pilot base.
Virgin's announcement follows a decision by rival Qantas last week to stand down two-thirds of its 30000 workforce as it slashed capacity.
Qantas said on Wednesday it had secured $1.05 billion of funding against its aircraft fleet to help strengthen its financial position as it grapples with a plunge in demand due to the coronaTirus pandemic.
The loan has a tenure of up to 10 years, an interest rate of 2.75 per cent and contains no financial covenants in line with the rest of the Qantas debt book.
"Over the past few years we've significantly strengthened our balance sheet and we're now able to draw on that strength under what are exceptional circumstances," Qantas chief executive Alan Joyce said.
"Everything we are doing at the moment is focused on guaranteeing the long-term future of the national carrier, including making sure our people have jobs to return to when we have work for them again."
Australian Associated Press