VIRGIN FLIES THROUGH DIFFICULTY AND NARROWS LOSS
Written on the 19 February 2015
VIRGIN Australia Holdings (ASX: VAH) has flown through what CEO John Borghetti describes as "one of the most difficult years in Australian aviation history" to post an underlying profit before tax of $10.2 million, an improvement on a loss of $45.4 million in the prior corresponding period.
The after tax statutory loss of $47.8 million is down from last year's $74.3 million half year loss.
Total group revenue for the period increased six per cent from the prior corresponding period to $2.4 billion, with leisure and international segments remaining constrained, but the business segments of corporate and government, charter and interline and codeshare seeing growth.
Borghetti says the company is on track for corporate and government to comprise 30 per cent of domestic revenue by end of fiscal year 2017, with this goal supported by the recent Conde Nast accolade of VAH being one of the top 10 airlines in the world for business travel.
The company has achieved a turnaround in Tigerair Australia performance, following the acquisition completion last week, and also increased numbers in its Velocity Frequent Flyer program through new major partnerships with Australia Post, Aussie Home Loans and BP, and turned focus to its charter business to a rewarding result.
VAH CEO John Borghetti says the group has been successful in achieving growth in spite of blows to consumer sentiment.
The company also reports to have benefitted approximately $3 million from the decline in oil prices, but Borghetti commented this was lower than the benefit from the previous corresponding period due to the decline in the Australian Dollar.
"We have succeeded in driving domestic yield growth despite ongoing subdued consumer sentiment which continues to impact overall demand," says Borghetti.
"The performance of the international business has been impacted by increased competitive pressure in key international markets.
"Virgin Australia Group saw a benefit of approximately $3 million from the decline in oil prices in comparison to the first half of the 2014 financial year.
"Based on our current hedging position and market rates, we expect to see further benefit in the second half of the 2015 financial year.
"We should see a pricing benefit in the second half of around $50 million, if the oil price remains at current levels."
Borghetti says the company expects an improved performance in the second half of the 2015 financial year compared to the prior corresponding period, but due to current market conditions, cannot provide more specific guidance.