Virgin on course for profit
VIRGIN Australia is on the cusp of returning to profitability after lower fuel prices and improved market conditions saw it rein in its full year loss.
The airline is yet to release its full year results, but figures included in its latest quarterly update show it made a net loss of $ 93.8 million in 2014/ 15, which is a $ 260 million improvement on last year’s result.
On an underlying basis, the company lost $ 49 million, which is ahead of the $ 65 million loss analysts had expected.
The airline will release its full year results on August 7.
Morningstar analyst Ross MacMillan said the airline was now likely on track to post its first profit in four years.
“Conditions look like they are improving and it certainly leads towards a situation where we’d probably anticipate Virgin would make a profit in the next financial year,” he said.
Analysts expect the airline to post an underlying profit of around $ 147 million for 2015/ 16.
The narrowing in the airline’s full year loss result has been driven in part by an almost halving in oil prices in the past 12 months.
Meanwhile, Virgin and Qantas have stepped back from a profit- draining battle for market share that saw them put on excess capacity.
Virgin has also been working to strip out $ 1 billion in costs over five years and grow its share of the corporate travel market, traditionally been dominated by Qantas.
But Virgin’s turnaround pales in comparison to that of Qantas, which is expected to make a near $ 1 billion underlying profit a year after posting a $ 646 million underlying loss.