Cost-cutting, restructuring and fleet-reduction efforts have pushed Virgin Australia to post an annual loss of AUD 224.7 million.
The result is due largely to one-off charges aimed at setting up the carrier for future profitability.
The airline, which will report its full result on 5 August 2016, used a fourth quarter trading update yesterday to brace the market. Virgin Australia expects the changes it is setting in place to save up to AUD 300 million a year by the end of 2018/19.
The current result includes between AUD 410 million and AUD 450 million in one-off charges.
Virgin Australia chief executive John Borghetti said the airline group managed to improve its underlying performance, increase passenger numbers and lift load factors amid a “challenging operating environment” in the fourth quarter, Australian Aviation reported.
“During the quarter, the group took action in response to operating conditions through strategic capacity reductions in line with demand,” Borghetti said.
As previously announced, Virgin is rationalising its fleet by phasing out all 18 Embraer E190 jets and between four and six ATR 72 turboprops over the next three years to cut overheads and improve its balance sheet.
In the same time frame, Virgin’s low-cost carrier Tigerair Australia will switch over to become an all Boeing 737 airline. Tigerair currently flies 14 A320s on domestic routes and uses three B737-800s on international routes, to Bali from Adelaide, Perth and Melbourne.
Written by Peter Needham