Virgin “on track” to return to profitability in FY16

Virgin “on track” to return to profitability in FY16
By Anne Majumdar


Virgin Australia has its sights set on a profitable 2016 financial year after it posted a significant improvement in the first quarter, with subsidiary Tigerair Australia also recording its first profit.

The airline reported an underlying profit before tax of $8.5 million for the quarter, up $53.5 million on the previous corresponding period. The 2015 financial year saw the carrier post an underlying loss of $49 million, nonetheless a significant improvement on the $200 million loss of the previous year.

The company only took complete control of Tigerair Australia in October 2014, but it said that when 100% of the low cost carrier’s performance was judged on a like-for-like basis, the increase for the quarter jumped to $73.3 million.

Chief executive John Borghetti reported a “significant turnaround” in financial performance.

“This result reflects our continued success in driving Revenue per Available Seat Kilometre and yield growth, while controlling costs,” he said.

Tigerair Australia also further improved its performance, recording earnings before interest and tax of $0.4 million – an improvement of $20.2 million on the previous corresponding period. The strengthened result was attributed to improvements in unit revenues and cost efficiencies.

The combined effort prompted Borghetti to express optimism for the 2016 financial year.

“Based on current market conditions, the Virgin Australia Group is on track to return to profitability in the 2016 financial year and report a Return on Invested Capital in line with its cost of capital,” he said.

 

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