Virgin Australia will this morning report a $110 million year-on-year turnaround as the airline continues to grow its share of the business travel market.
Across the six months from July to December 2015 Virgin recorded a bottom-line profit of $62.5 million, up from a $47.8 million loss booked for the corresponding period in 2014.
The uplift reflects broad gains after Qantas and Virgin Australia called an end to a bruising 'capacity war' which saw supply outstrip demand, along with a substantial drop in the price of jet fuel.
At the same time, domestic airfares – the most sizeable portion of Virgin's network – have edged up while airlines keep a tight rein on costs.
Virgin's strongest result since 2010 was "was driven mainly by strong revenue growth in each of the group's business units" said CEO John Borghetti, adding that savings delivered by lower fuel "were offset by the weakening Australian dollar."
Virgin has made solid gains at the revenue-rich pointy end. Corporate and government travellers are expected to account for 30% of the airline's domestic revenue by mid-2017, helping insulating it from the more fickle leisure segment.
That's most recently been buoyed by the launch of Virgin's new domestic business class (below), which is now available on all east-west A330 flights while Qantas is still six months out from completing its own A330 refit, plus upgrades to Virgin's airport lounges at Perth and Brisbane.
Virgin's long-range Boeing 777-300ER jets will be upgraded to the same business class seats from early April as the airline eyes a larger slice of the lucrative trans-Pacific market on its Sydney-Los Angeles and Brisbane-Los Angeles routes.
The wide, comfortable seats with their ample personal space, 18 inch video screens and direct aisle access will easily outclass the Skybed II business class on Qantas’ Airbus A380s and Boeing 747s, giving Virgin Australia a critical advantage in the tussle for LA-bound business travellers.
Virgin Australia's international arm is said to be on track to return to profitability by the end of the 2017 financial year.
On the domestic front Virgin is working on a wide-scale roll out of a self-service check-in system and bag drop which in November debuted at the airline’s new Perth terminal.
The airline's Velocity Frequent Flyer program enjoys continued momentum from its alliance with BP in the face of the stalled Qantas partnership with Woolworths/Caltex.
Velocity now has 5.7 million members now on the books – up some 21.7% over this time last year - and an average sign-up rate of almost 2,600 new members per day.
Borghetti is eager to swell the ranks of Velocity with more Qantas card-holders, especially those at the top of the loyalty ladder, shifting them from rusted-on Red Roo followers to "Virgin Australia loyalists."
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