Virgin Australia records $355 million loss

By Chris Chamberlin, August 29 2014

  • Virgin Australia reveals $355.6 million loss
  • 49% of the loss attributed to restructuring and excess capacity
  • Trans-Tasman business class from February 2015

Virgin Australia has unveiled a loss of $355.6 million over the 2013-2014 financial year, although restructuring costs of $117.3 million and an 'asset impairment charge' of $56.9 million account for 49% of the overall statutory loss.

The latter is primarily attributed to "excess capacity and competitive pressure in the South East Asian market" and comes on the back of the airline retiring one Airbus A330 aircraft, with a second to follow in due course.

Virgin Australia's underlying loss comes in at $211.7 million, which by nature excludes one-off restructuring and other transformation costs.

“While the current environment remains challenging, the Virgin Australia Group has significantly enhanced its strategic position over the last four years and is well placed to capitalise on market recovery”, said Virgin Australia CEO John Borghetti.

To claw its way back into the black, Virgin Australia will sell 35% of its Velocity Frequent Flyer program to Affinity Equity Partners for $336 million.

When asked about other cost cutting and revenue raising measures that could improve the airline's performance, Borghetti said that Virgin Australia "will be prudent on costs – (both in) removing costs and improving productivity ... but not at the expense of the consumer experience."

The flying public "shouldn't assume that the lowest-paid fare will go through the roof," he added.

Orders for Virgin Australia's Boeing 737 MAX aircraft will also be brought forward from 2019 to 2018 as part of a $1 billion program to reduce operating costs and boost productivity and efficiency.

Business class will also replace premium economy on VA's trans-Tasman and Pacific Island flights from February 2015, and both Perth and Darwin will see new airport lounges in 2015.

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ChrisCh
ChrisCh

Chris Chamberlin

Chris Chamberlin is the Associate Editor of Executive Traveller and lives by the motto that a journey of a thousand miles begins with a single step, a great latte, a theatre ticket and a glass of wine!

whipper

whipper

17 Feb 2012

Total posts 121

Its funny how all the anti-Qantas trolls are silient on this stinker of a result.

tmsmile

tmsmile

Qantas - Qantas Frequent Flyer

08 Nov 2011

Total posts 101

Just shows how much money the big three Virgin backers are willing to lose in order to hurt Qantas (not helped by the fact that Joyce and Co are incompetent when it comes to fighting back)

woganfan

woganfan

Qantas - Qantas Frequent Flyer

13 Sep 2011

Total posts 182

I assume you mean people commenting on the Qantas dismal performance.  Not everyone is a troll simply bashing Qantas, Qantas management have been disastrous for their shareholders and their customers. I would like the ability to fly Qantas international from Perth but cannot now.  So I am forced on to other airlines where I am then penalised by Qantas loyalty.  This isn't trolling.  It is fact. 

gippsflyer

gippsflyer

Qantas - Qantas Frequent Flyer

10 Jan 2013

Total posts 715

I'd say there's not much to say, because you expect young businesses in growth phases to run into red ink (particularly in the capital intensive aviation industry). Qantas, on the other hand, is a well established business in the maintenance phase of its life cycle - it already had dominant market share, it just had to maintain it. You'd expect well established business to turn profit easily, and recent entrants to invest for future returns.

aussieboyaussie

aussieboyaussie

20 Aug 2012

Total posts 114

A Virgin lounge in Hobart would be awesome thanks.  ASAP.

leisuretraveler

leisuretraveler

Qantas - Qantas Frequent Flyer

28 Apr 2012

Total posts 14

JB has spent the extra funding that his foreigh  airlines gave Virgin so it will be interesting to see VAH financial results in  6 months time and whether they will have to put extra money in again.

Could JB be looking for a new job before AJ?


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