Virgin Australia today announced a first half Underlying Profit Before Tax of $10.2 million dollars but reported an overall Statutory Loss After Tax of $47.8 million. These results, whilst still putting the airline in the red, are a vast improvement on the $74.3 million loss reported in the first half of Financial Year 2014.
Virgin Australia Group Chief Executive Officer, John Borghetti said: “Virgin Australia Group’s results for the first half of the 2015 financial year reflect a significant improvement in financial performance. Total revenue and income increased 6.0 per cent to $2,377.5 million which includes $75.5 million of revenue from Tigerair Australia."
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Domestic Segment EBIT (a non statutory measure) recorded a profit of $103.8 million for the half year ended 31 December 2014 compared to a profit of $25.9 million in the prior corresponding period. International Segment EBIT was a loss of $49.5 million compared to a loss of $31.9 million in the prior corresponding period.
Borgetti believes the improvement in results is driven primarily by the group’s continued progress in driving yield growth in the domestic market and the disciplined execution of the companies five-year, $1 billion cost reduction program. He also continues that the 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.
It's no secret that Virgin are looking to take some of the domestic market share Qantas currently holds for Corporate and Government travel. Despite today announcing a three month delay on the roll out of their impressive new domestic business class on the A330, Borghetti states "The Group remains on track to reach its target of 30% of Virgin Australia domestic revenue from the corporate and government segment by 30 June 2017."
Like competitor Qantas, Virgin too, has felt the impact of competition in the international market. “The performance of the international business has been impacted by increased competitive pressure in key international markets. Virgin Australia Group will be implementing a series of initiatives to improve the performance of this business such as retiming flights to Bali, upgrading its long-haul business class product and adding business class to its trans-Tasman flights," said Borghetti.
AirlineRatings.com spoke with the airlines CEO who said: "We are pleased with the momentum that we have built during the first half and there will be many more positives to come for customers as we roll out our new Business Class suites, expand our lounge network and enhance our services in the air and on the ground and we are very grateful for the enormous support we’re getting from our customers."
With Qantas forecasting a profit of between $300m and $350m for its first half to be announced next week, it shows that as long as competition and capacity growth is practical and sesnible there is room for both carriers to be succesful in the market.
Virgin Australia Group Financial Summary
- Underlying Profit Before Tax2 of $10.2 million, an improvement on a loss of $45.4 million in H1 FY14
- Statutory Loss After Tax of $47.8 million, an improvement on a loss of $74.3 million in H1 FY14
- Positive Group Yield3 and Domestic Yield growth on H1 FY14
- Underlying CASK4 reduction of 3.2% including fuel and foreign exchange on H1 FY14, with Virgin
- Australia CASK reducing by 3.6% excluding Tigerair Australia and fuel
- Total cash position of $1.1 billion, up from $783.8 million at 30 June 2014, unrestricted cash position of $838.8 million, up from $541.0 million at 30 June 2014
See the full Financial Results report here
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