Virgin Australia has released its FY18 results, reporting its sixth full-year after-tax loss.
Fairfax reports asset write-downs drove the airline $653 million into the red, compared with $185 million loss a year ago.
However, underlying profits, stripping away the impact of impairments and costs associated with Virgin’s business restructuring plan, put the airline at a $109 million profit, up from a loss of $3.7 million last year.
“The group has delivered its strongest Underlying Profit Before Tax in 10 years,” said Virgin’s managing director John Borghetti said in a statement on the ASX.
“This outcome was driven by record earnings in our core domestic business, which represents two-thirds of our revenue base, and supported by significant improvements in our cash leverage results.
“Today’s results show the business is in a good position to achieve sustainable profitability going forward.”
Borghetti said Virgin’s domestic business reported its highest earnings on record, with a passenger growth of 2.3 per cent.
“Other factors driving our domestic performance included growth in the corpotate and leisure markets, the strength of our ancillary products, improved fleet utilisation, the exit of loss-making routes and disciplined capacity management,” he said.
Of the $653.3 million loss, Borghetti said the result was impacted by major accounting adjustments following a review of the group’s asset values.
“These accounting adjustments have been made as the group leverages its transformed product to pursue initiatives in the Asian aviation and loyalty markets.
“While these initiatives are undertaken, and in light of industry-wide fuel price increases, the group has taken a prudent approach and made accounting adjustments to the carrying value of the deferred tax assets and the assets of the international business.”
“While these adjustments have impacted our statutory result for the year, they are non-cash and have no impact on the fundamentals of the groups underlying business.
“We are confident in the performance of the groups underlying business and that long-term benefits from our growth plans will be delivered.”