Virgin Australia Holdings revenue and profit falls in 1HFY2017, but international business improves

    Virgin Australia Holdings today reported a decline in revenue of 1% for 1HFY2017.

    Financial highlights for the six months ended 31-Dec-2016:

    • Revenue: AUD2634 million (USD1984 million), -0.9% year-on-year;
      • Passenger: AUD2224 million (USD1676 million), -0.4%;
      • Other ancillary: AUAD385.6 million (USD290.5 million), -3.4%;

     

    • Operating costs: AUD2597 million (USD1956 million), +1.2%;
      • Labour: AUD595.2 million (USD448.4 million), -0.3%;
      • Fuel: AUD448.9 million (USD338.2 million), -20.0%;

     

    • Operating profit: AUD38.5 million (USD29.0 million), -58.6%;

     

    • Segment EBIT: AUD127.7 million (USD96.2 million), -20.9%;
      • Virgin Australia domestic: AUD80.0 million (USD60.3 million), -38.5%;
      • Virgin Australia international: AUD0.8 million (USD0.6 million) – compared to a loss of AUD30.8 million (USD23.2 million) in p-c-p;
      • Velocity: AUD66.0 million (USD49.7 million), -6.8%;
      • Tigerair Australia: AUD6.2 million (USD4.7 million), -55.4%;

     

    • Net profit (loss): (AUD21.5 million) (USD16.2 million), compared to a profit of AUD62.5 million (USD47.1 million) in p-c-p;
    • Total assets: AUD6701 million (USD5049 million);
    • Cash and cash equivalents: AUD1596 million (USD1202 million);
    • Total liabilities: AUD4847 million (USD3652 million).

    *Based on the average conversion rate at AUD1 = USD0.753416

    Notwithstanding continued subdued trading conditions in the domestic market, the Group has strengthened its liquidity and cash position and is ahead of schedule in the implementation of the Better Business Program.

    John Borghetti, CEO. Source: Company statement, 17-Feb-2017.

    Virgin Australia Domestic

    The airline announced that Virgin Australia domestic operations had executed disciplined capacity management, in response to subdued domestic trading conditions.

    Domestic sectors flown declined 4.7% year-on-year in the context of “subdued trading conditions that affected demand in parts of the domestic aviation market”.

    Yield declined 5.6% exceeding revenue per Available Seat Kilometre (ASK), which fell 3.5%.

     

    Virgin Australia International

    Virgin Australia International results were significantly improved however, driven by its international improvement strategy. This included the removal of Phuket and some Denpasar operations and the introduction of new business class suites and premium economy seats on the group’s Boeing 777s. Revenue per ASK was down 0.2% and yield down 0.7%.

     

    Tigerair Australia

    Low Cost subsidiary Tigerair Australia EBIT declined, but was still profitable at the underlying level. Revenue per ASK down 5.4% with yield down 8.4%. Tigerair Australia however continues to attract domestic passengers, with RPKs outpacing ASK growth over 1HFY2017.

     

    Velocity Frequent Flyer

    Velocity Frequent Flyer programme achieved target of seven million members in Jan-2017, almost six months ahead of schedule.

    Velocity membership base expanded 87% over the past three years as the programme continues to invest in growth opportunities, including more partnerships and new platforms.

    Implementation of ‘Better Business’ programme is ahead of schedule and on track to deliver net free cash flow savings increased to AUD300 million (USD231 million) p/a (annualised run rate) by the end of FY2019.