VIRGIN Australia’s first half results released this morning (TD breaking news) showed the airline’s best underlying profit in 11 years, and was delivered despite additional fuel costs of more than $88 million.
The carrier’s overall revenue was up 10% to a record $3.07 billion for the six months to 31 Dec, driven by strong domestic yield, passenger growth and new routes including SYD-HKG.
CEO John Borghetti, who is stepping down next month following the appointment of Paul Scurrah (TD 06 Feb), said the results “continue to demonstrate the ongoing success of our cost transformation program which is improving cash flow and reducing financial leverage to deliver sustainable profitability”.
Borghetti said VA had built a “strong, competitive domestic operation,” which was continuing to attract more customers.
After-tax profit soared to $73.8 million, including $24.6 million in net restructure costs, mostly due to fleet simplification.
About two thirds of the airline’s revenue came from its domestic operations, which also recorded a 6.3% yield improvement and was performing at an “all time high,” according to Borghetti.
Losses in the international operation narrowed to $12 million, but margins declined due to increased fuel costs and the impact of the competitive international environment, particularly on USA routes.
“We remain focused on accelerating access to the Greater China market through services to Hong Kong and through our partnerships with key airline partners,” Borghetti said.
Tigerair Australia recorded an $8 million loss due to accelerated depreciation costs, but achieved a 14.2% yield improvement, while the Velocity frequent flyer business delivered almost 350,000 new members and its highest ever redemption levels for rewards.
Borghetti said based on forward domestic bookings and current market conditions, group revenue was expected to grow by at least 7% during the current quarter.
Shares in Virgin Australia jumped 6% following the announcement, to 20.7c each.
Source: traveldaily