For the Virgin Blue Holdings Limited, the 2011 Financial Year marks the first year of their three year Game Change Program strategy and the Virgin Australia’s goal of transforming into airline of choice is fast becoming a reality.
The Board has been exceptionally supportive of this strategy and has also found extensive support amongst stakeholders and the events of this year have demonstrated the foresight of the team in embarking the program. Despite the uncertain economic environments that are faced today, the company managed to make progress on the strategy.
However, 2011 was a tough year financially and that the unprecedented series of events meant a disappointing headline result for investors resulting in an after tax loss of $67m. But nevertheless, the company has a strong cash balance, it has already secured funding for future aircraft purchases and the underlying business is solid.
The company is maintaining a tight control on costs and is heavily focused on future opportunities to drive revenue growth. Strong progress is already being reflected in the uplift in corporate and government revenue year on year.
The company is already experiencing the results of improved financial outcomes as a direct consequence of the Game Change Program, which also shows the benefit of strategic initiatives designed to drive long term performance improvement. They are now better positioned to positively respond to changes in the operational environment in 2012.
As part of its continuous improvement process, the company has established a Board Safety and Operational Risk Review Committee that will directly supervise the safety performance. This will guarantee that safety remains the number one priority, in all departments from the day-to-day operations of the engineers and crew, to the strategic decisions of the management and board.
In December 2010, the Directors formalized a vision for the airline to become a sustainability leader in the aviation industry and have done considerable work this year on reaching the current position and goals. The company has a number of fuel and operational efficiency initiatives underway, including investments in a six year $2.5 billion fleet renewal program which will see average aircraft age reduce from 4.9 years to 4.1 years by the end of the 2012 Financial Year.
“The changes over the past 12 months have been both extensive and exciting. Starting with securing a single strong brand for the entire group, we have redesigned the in-flight and ground guest experience, established a global network, significantly expanded our domestic regional network and integrated our airline operations. The response has been extraordinary. Our existing guests have welcomed the enhancements and one only needs to look at the number of new corporate accounts that we have already signed to gauge the success to date of the new business offering,” says Chairman Mr. Neil Chatfield.
Few achievements for the company in the past year include first, the 2011 Airline Passenger Experience Association Passenger Choice Awards. Second, the SkyTrax 2011 World Airline Award, and third, CEO Mr. Borghetti recently awarded the honour of Airline CEO of the Year for 2011 by the Centre for Aviation (CAPA).
Furthermore, Virgin Australia is extensively known as an important Australian company, this year achieving the Randstad Award for Australia’s most attractive employer, Australia’s fourth most respected company, Australia’s customer service organization of the year and Australia’s most admired business.
The outlook for the company is that the environment remains challenging. It is difficult to predict how the global economic and financial woes will be resolved in the near term, but there are some positive signs as US data strengthens and Europe. The issues weigh heavily on consumer sentiment, although we are fortunate to be in a region that is experiencing economic growth and development.
The company is however confident that the Game Change Program is the right course of action. In the first quarter of the current financial year, they are profitable and tracking ahead of budget and on last year.
Written by: Kanchana Ganglani