Virgin’s plan after whopping $681m loss
VIRGIN Australia has posted a full-year loss of $681 million, impacted by a $120 million impairment of its international business assets and deferred tax accounting write-offs for $451.9 million.
Excluding the one-off items, it swung to an underlying profit before tax of $109.6 million, boosted by record earnings in its core domestic business, AAP reports.
Virgin's revenue for the year to June 30 was up 7.4 per cent to $5.42 billion and it expects revenue to increase by at least 7 per cent in the first quarter of 2018/19 financial year.
It is the sixth consecutive loss for the Virgin Australia group, which also includes low-cost airline Tigerair and the Velocity rewards program.
But chief executive John Borghetti said the underlying before tax profit of $109.6 million was the strongest result in a decade, fuelled by record-high earnings in the airline's domestic business.
Domestic underlying business recorded its highest earnings since reporting began in 2011/12 at $516 million - up 49.5 per cent on the previous year.
Virgin Australia International earnings fell $13.3 million, spurred by higher fuel prices and an estimated $10 million impact from the Bali volcano in 2017 that forced airlines to scrap flights, The Australian reported.
But Mr Borghetti, who will retire at the end of next year, said the company expected its long-term benefits from its growth plans.
"Today's financial results show that the business is in a good position to achieve sustainable profitability going forward," Mr Borghetti said, according to Fairfax.
"We are confident in the performance of the Group's underlying business and that long-term benefits from our growth plans will be delivered," he said.
The airline anticipates its new Melbourne to Hong Kong route and Sydney to Hong Kong routes will capture the growing number of Chinese tourists visiting the country.
Mr Borghetti said the airline's investment in on-board Wi-Fi, a new mobile app and better airport check-in facilities were paying off.
"The success of our investment is reflected in the growth of our domestic passengers, revenue and profitability," he said.
Virgin Australia recently announced it would be the only carrier to offer free Wi-Fi for all flights from Australia to Auckland, Christchurch, Queenstown, Wellington and Dunedin - which start on October 28 - and a free "substantial meal and drink" for each customer.
That's in addition to at least 23kg of baggage for free in every fare type.
Earlier this month the carrier also revealed details of new benefits for Velocity Frequent Flyers on short haul destinations such as New Zealand, Bali, Fiji and Samoa, and increased Status Credits earning potential.
"For the first time, Velocity members will earn points per dollar spent for short haul international destinations, rather than based on the distance travelled," Velocity Frequent Flyer CEO Karl Schuster said in August.
From October 28, Velocity members will now be awarded a minimum of five points per dollar spent on fares from New Zealand. Platinum, Gold and Silver members will continue to earn a Points Bonus meaning that Platinum Velocity members will now receive up to 10 points per dollar spent.
"Members will earn more Velocity Points when travelling to these destinations and we believe our points offer for New Zealand flights is one of the best," Mr Schuster said.
Virgin Australia has also announced codeshare arrangement with Singapore Airlines on flights between Melbourne and Wellington, for travel from October 28. The flights, operated by Singapore Airlines, will operate four times per week.
- With AAP.