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Virgin Oz posts best interim half-year profit in decade

February 14, 2019 Headline News No Comments Email Email

Virgin Australia’s outgoing chief executive John Borghetti may have turned the airline’s fortunes around, with the group posting its strongest underlying interim pre-tax profit since 2008 and achieving record revenues.

The group yesterday posted an underlying profit of AUD 112.3 million, up 37.1%, for the six months to 31 December 2018 on record revenue of AUD 3.07 billion – which was itself up 10%.

Based on current market conditions and forward bookings, Virgin Australia Holdings expects to grow by at least 7% over the previous corresponding quarter.

The result was driven by record performance in Virgin Australia domestic business, backed by stable market conditions, disciplined capacity management, continued effective cost control under the airline’s Better Business Program and stronger passenger yield.

In an issued statement, Virgin said the performance demonstrated its progress in driving improved earnings and strengthening the financial foundation of its business to achieve sustainable profitability.

Borghetti said the results represented “our improving profitability after a significant period of investment and repositioning.

Paul Scurrah (right) with John Borghetti last week

“We’ve made solid progress in strengthening the financial foundations of our business. Today’s results continue to demonstrate the ongoing success of our cost transformation program which is improving cash flow and reducing financial leverage to deliver sustainable profitability.

“We’ve built a strong, competitive domestic operation under the Virgin Australia Domestic brand, which recorded an all-time high Segment EBIT result and is continuing to attract more customers and deliver two thirds of our revenue.

“This is an important foundation as we continue to build on our established position in the market and mature into our new long-haul Asian routes.

“The improved results were delivered despite fuel headwinds negatively impacting global aviation. While we are not immune from global economic changes, we have prudent hedging strategies and the right cost and efficiency programs in place to help mitigate against fuel price increases.”

Borghetti announced in June 2018 that he would not renew his contract past the end of 2019. He will step down on 25 March 2019.

Last week, Virgin Australia appointed Paul Scurrah to replace him. Scurrah has an impressive travel industry background, having worked at various times with Travel Centre, Qantas, American Express, Australian Airlines, Ansett and Tourism Queensland – even serving on the board of the Australian Federation of Travel Agents (AFTA).

Written by Peter Needham

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