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SPIRALLING fuel prices have not stopped Virgin Australia Holdings (ASX:VAH) from reporting a net profit after tax of $51.8 million for the six months to December 31, 2011 – a 118 per cent improvement on the previous corresponding period.
CEO John Borghetti (pictured) praised the result as proof the corporate strategy to reposition and improve the company’s financial position had soared.
“While we have continued to see high fuel prices and an uncertain economic environment, the game-change program strategy has helped us to improve earnings stability and achieve growth during this half,” he says in a statement to the ASX.
The business spent the past six months diversifying its revenue base and driving yield growth to stabilise its financial future.
“We have made significant progress in the high-yield corporate and government market. This important segment now makes up close to 17 per cent of our total revenue, up from 13 per cent in the 2011 financial year,” says Borghetti.
“The airline also secured 35 new accounts during this period and maintained every one of our previous accounts, the vast majority of which were renewed with increased spend. This produced corporate and government revenue growth of 81 per cent on the prior corresponding period.”
The group kept tight controls on costs, bringing a 10 per cent improvement in underlying operating margins.
“We also introduced a new tiered hedging policy which provides us certainty in the short-term and enables us to manage medium-term risk, which has helped us to manage in the continuing high fuel cost environment,” says Borghetti.
“We are focussed on maintaining a strong unrestricted cash balance into the future while improving our balance sheet efficiency.”
Total revenue increased 18 per cent to $2 billion compared with the same corresponding 2010 period.
The board has decided against an interim dividend due to uncertain economic conditions.
“We will continue to review our dividend policy having regard to the ongoing cash requirements of the company,” says Borghetti.
Virgin shares rose 8.2 per cent to 39 cents per unit.
Read more on Virgin in the annual Brisbane Top Companies edition of Brisbane Business News – out in March at a newsagent near you.
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