Virgin Australia releases FY2017 results reporting an improvement in underlying performance

Virgin Australia released its Full Year 2017 financial results today, which included information on profit, loyalty programme, and outlook for FY2018.

Results:

Virgin Australia Group reported (Sep-2017) financial highlights for 12 months ended 30-Jun-2017:

  • Positive free cash of AUD34.2 million (USD27.4 million), an AUD126.4 million (USD101.2 million) improvement over FY2016 and the first positive free cash flow since FY2012;
  • AUD272.3 million (USD218.1 million) increase in the group’s closing total cash balance, to AUD1396.1 million (USD1118.2 million);
  • AUD839 million (USD671.8 million) reduction in net debt, including AUD260 million (USD208.2 million) in accelerated debt repayments;
  • Underlying loss before tax of AUD185.8 million (USD148.8 million), compared to AUD224.7 million (USD180.0 million) in FY2016;
  • Virgin Australia Domestic achieved improved underlying performance in Q4FY2017, and “disciplined” management of domestic capacity in response to subdued trading conditions;
  • Virgin Australia International reported an AUD49.3 million (USD39.5 million) improvement in underlying EBIT, supported by growth in yield and unit revenues;
  • Tigerair Australia domestic operations were profitable at the underlying EBIT level, with the business’ overall performance impacted by Bali operations;
  • Velocity frequent flyer programme increased revenue by 13.2% year-on-year and underlying EBIT by 22%, as well as growing base to eight million members.

Virgin Australia chairman Elizabeth Bryan, said the carrier’s FY2017 underlying and statutory losses were “predominately impacted by subdued trading conditions” as well as “upfront costs” associated with implementing its ‘Better Business’ programme. As the programme continues, the carrier expects these costs to reduce and benefits from “ongoing, sustainable savings that the programme is on track to deliver”.

Virgin Australia ‘Better Business’ plan to deliver better than targeted free cash flow savings

Virgin Australia Group CEO John Borghetti, reported the carrier’s three-year ‘Better Business’ turn around programme is on track to produce net free cash flow savings of AUD350 million (USD280 million) p/a by the end of FY2019, up from its original target of AUD300 million (USD240 million).

Virgin Australia chairman Elizabeth Bryan, said the carrier achieved its FY2017 cash and efficiency programme targets, delivering a positive free cash flow result, improving financial leverage by 14.1% and maintaining a “strong” cash balance. The carrier also expects to deliver high cash flow savings than originally targeted under its ‘Better Business’ programme.

Virgin Australia FY2018 focus on cost base, balance sheet, revenue and China expansion

Virgin Australia chairman Elizabeth Bryan, via the carrier’s 2017 Annual Report, said the carrier’s FY2018 focus will be on “improving our cost base, building strength in our balance sheet and growing revenue”. The group’s ‘Better Business’ turn around programme is expected to remain ahead of schedule, with improving cash, debt and leverage outcomes to remain a key focus, with further balance sheet improvements expected to be delivered. Virgin Australia is also going to “seize growth opportunities and consolidate our market position”, in particular expanding access to Greater China.

Virgin Australia to defer board evaluations for 12 months, plans to increase size to 12 members

Virgin Australia, via its Corporate Governance Statement, reported it deferred its board performance evaluations until the financial year ending 30-Jun-2018, due to the new board appointments made during FY2017. The decision was made to “allow current directors a reasonable opportunity to operate collectively as a Board before arranging an evaluation. Since the resignation of David Baxby on 10-Aug-2017, the board has comprised 11 members, including representatives from Etihad Airways, Singapore Airlines, Nanshan Group, HNA and Virgin Group. The board is also looking to appoint an independent director to increase its size to 12.