Vir­gin on course for profit

Townsville Bulletin - - NEWS -

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.

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