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ITB Asia 2015
Virgin posts half-year loss
Friday, February 28, 2014
Virgin Australia has reported a statutory loss after tax of A$83.7 million for the first half of financial year 2014.

It blamed a challenging trading and competitive environment, ongoing subdued consumer sentiment and economic uncertainty, the effect of strong market capacity growth and the unrecovered A$27.0 million cost of the carbon tax for the result.

John Borghetti, chief executive Virgin Australia said: “Consequently, the Australian domestic aviation industry has made a first half loss for the first time in 20 years.

“However, Virgin Australia continued to increase its proportion of domestic revenue from the corporate and government market segment and outperformed its main competitor on the key measures of growth in total Group revenue, domestic yield, international yield and Group revenue load factor.

“We remain on track and have delivered on all first-half targets around Velocity Frequent Flyer (now four million-plus members), global market access and customer experience.

“Virgin Australia also has progressed with the integration of Skywest, continuing to align resources, systems and processes, and has worked closely with joint venture partner Tigerairto improve its performance.

“Total Group revenue increased 5.6 per cent on the first half of the 2013 financial year, including the additional revenue associated with the acquisition of Skywest.

“Domestic Yield growth was slightly positive for the first half of the 2014 Financial Year compared to the prior corresponding period.

Skywest and partners

“The Skywest business was acquired in April 2013 and we are beginning to see some positive results.

“Skywest’s charter revenue increased 45.0 per cent during the first half of this financial year compared with the prior corresponding period, in part because the regional business can now access Virgin Australia’s Boeing 737 fleet for charter use. We intend to continue to grow our regional and charter business aggressively.

“Consistent with expectations, Skywest remains on track to be earnings accretive from Financial Year 2015.

“Elsewhere, Virgin Australia’s strong relationships with global airline alliance partners, Air New Zealand, Delta Air Lines, Etihad Airways and Singapore Airlines are critical to the ongoing success of the company,” said Borghetti.

“Over the next 18 months, we will focus on optimising the business for consistent and sustainable performance. This will be achieved through accelerating efficiency and productivity initiatives, both internally and through leveraging the scale of our alliance partners, fast-tracking penetration into higher-yielding market segments in order to grow yield, continuing to lead the Australian industry in customer experience and creating value through our customer loyalty program.

“Given the uncertain economic environment, we are unable to provide guidance for the remainder of the 2014 financial year,” Borghetti concluded.