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Virgin Australia secures loan, hints of new markets

September 2, 2013 Aviation, Headline News No Comments Email Email

egtmedia59Virgin Australia has increased lucrative corporate business during 2012/13 but has recorded a full-year loss, as expected, in the face of fierce competition from Qantas. Restructuring costs and the carbon tax also played a part.

The airline’s net loss after tax was AUD 98.1 million. The previous year saw a profit of nearly AUD 23 million.

The airline has secured AUD 90 million worth of new loans from its main airline shareholders: Air New Zealand, Etihad Airways and Singapore Airlines. Each will separately provide funding, with a one-year loan term.

The year saw Virgin Australia add business class seats, switch to the Sabre GDS and acquire a 60% stake in Tigerair Australia.

When the cost of its purchase of Skywest is excluded, Virgin’s loss before tax was a little better: AUD 72.8 million.

Virgin’s chief executive John Borghetti told ABC News the year has been pivotal, as the company completed a major restructure and made several big acquisitions.

“We exceeded our business efficiency program target of AUD 60 million in sustainable efficiency gains, we expanded Velocity Frequent Flyer and improved its value proposition, increased our access to global markets and further developed the most important part of our airline, our people,” Borghetti said in an issued statement.

Virgin said its bottom line was also hit by nearly AUD 48 million in carbon tax costs.

Intriguingly, Borghetti said Virgin Australia was about to break into more “monopoly markets” but declined to reveal which markets they were.

“You will hear soon,” he said.

Borghetti wouldn’t provide forecasts for the group’s performance in this financial year, given the uncertain economic environment.

Written by Peter Needham

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