Virgin hit by $653m loss

VIRGIN Australia has extended its losses to more than $653 million as tax measures and asset write-downs counter a strong performance in the domestic sector ( TD breaking news).

Despite its best underlying pre-tax profit in 10 years, the airline group today revealed that accounting adjustments had wiped $120.8 million from the value of Virgin Australia International assets, and that $451.9 million in deferred tax assets had been de-recognised.

The result was a statutory loss after tax of $653.3 million in 2017/18, an increase from the loss of $185.8 million last year.

Virgin Australia Group chief executive officer and managing director John Borghetti said the adjustments were non- cash and had no impact on the fundamentals of the group’s underlying business.

“We are confident in the performance of the group’s underlying business and that long-term benefits from our growth plans will be delivered,” Borghetti said.

The group achieved an underlying profit before tax of $109.6 million, a $113.3 million increase on the previous year, despite a $45 million hit from rising fuel prices.

Group revenues were up 7.4% to a record $5.42 billion, while earnings (EBITDA) were up 26% to $596.8 million.

The domestic business grew strongly, with earnings (EBITDA) up 49.5% to $516 million.

However international operations suffered a 51% decrease in EBITDA to $19 million, having been hit by fuel prices and a $10 million impact from last year’s volcanic eruption in Bali.

Virgin International also carried start-up costs associated with new MEL-HKG and MEL-LAX routes, but achieved increases in capacity, passengers and revenue as a result.

Borghetti said group revenues were likely to grow at least 7% in the first quarter of the current financial year and that the group expected to return to profitability in the first half of 2018/19.