The Gold Coast Bulletin

Virgin has wings clipped

Sixth straight loss but outlook remains positive

- World Indices

VIRGIN Australia has reported its sixth consecutiv­e fullyear loss of $681 million after impairment­s and tax adjustment­s, but the airline is optimistic about delivering a statutory profit in the next half.

The company’s statutory profit for the year to June 30 was impacted by a $120 million impairment of its internatio­nal business assets and deferred tax accounting write-offs for $451.9 million. It follows a $185 million loss a year ago.

Full-year revenue, however, was up 7.4 per cent to $5.42 billion and the airline swung to Close Change an underlying profit before tax of $109.6 million, boosted by record earnings in its domestic business.

Domestic underlying earnings business recorded its highest earnings since reporting on the segment began in 2011-12 at $516 million – up 49.5 per cent on the previous year.

Virgin Australia chief executive John Borghetti (pictured) said the airline’s investment in onboard wi-fi, a new mobile app and better airport check-in facilities were paying off.

“The domestic business is in the best position it has ever been in – we have attracted an increasing share of passengers, grown revenue and now created a more efficient fleet and domestic network,” Mr Borghetti said yesterday.

“There’s no doubt our performanc­e so far is pleasing in its own right, but importantl­y, it shows that we will keep building a sustainabl­e and profitable business in the domestic market going forward.”

Virgin’s internatio­nal business, however, suffered a 51 per cent loss in earnings to $19 million, impacted by higher fuel prices, Bali’s volcanic activity in late 2017 and its investment in Hong Kong services.

The airline anticipate­s its new Melbourne-Hong Kong and Sydney-Hong Kong routes will capture the growing number of Chinese tourists.

Meanwhile, budget airline Tigerair reported an earnings loss of $7.6 million, an improvemen­t on the previous year’s result of a $9.9 million loss, and a 3.4 per cent increase in passengers. The company’s outlook is largely positive, with revenue expected to increase by at least 7 per cent in the first quarter of the 2018-19 financial year, following a bumper July.

The airline also expects to deliver an underlying and statutory profit in the first half of the financial year, notwithsta­nding an expected fuel price increase (net of hedging and foreign exchange) of $85 million.

Virgin’s total fuel cost is expected to be about $1.2 billion in 2018-19, but the company expects to keep fares competitiv­e.

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