Virgin Australia has posted a record full-year loss of AUD 653.3 million, its sixth consecutive year of finishing in the red – but all is not what it seems and excluding a couple of one-off items, the airline swung to an underlying profit before tax of AUD 109.6 million.
Chief executive John Borghetti expects the company to return to profitability in the first half of next year.
He said the underlying before-tax profit of AUD 109.6 million still represented the strongest result in a decade, fuelled by record earnings in the airline’s core domestic business.
As airlines and companies tend to post their full-year results at around the same time, the Virgin result virtually coincided with a stellar result for Virgin’s arch-rival Qantas, and an equally rosy annual outcome for Virgin’s erstwhile partner and shareholder, Air New Zealand.
Qantas notched up a statutory net profit of AUD 980 million for the 2018 financial year. Its underlying profit before tax increased by 14% to AUD 1.6 billion.
Air New Zealand announced earnings before taxation for the 2018 financial year of NZD 540 million (AUD 496 million), an increase from the prior year result of NZD 527 million (AUD 484 million), representing the second highest profit in the airline’s history. Net profit after taxation grew 2.1% to NZD 390 million (AUD 358 million).
The New Zealand carrier declared its commitment to a third short-term leased widebody aircraft to further assist during ongoing maintenance requirements associated with the global Rolls-Royce Trent 1000 engine issues.
Virgin Australia’s Borghetti was upbeat about his airline’s result.
Virgin Australia crew
“While these adjustments have impacted our statutory result for the year, they are non-cash and have no impact on the fundamentals of the group’s underlying business,” he said.
“We are confident in the performance of the group’s underlying business and that long-term benefits from out growth plans will be delivered.
“The group expects to be profitable at the underlying profit before tax and statutory levels in the first half of the 2019 financial year, notwithstanding an expected fuel price increase of AUD 85 million.”
Written by Peter Needham
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