Finance Finance News Virgin Airlines records $355.6 million loss

Virgin Airlines records $355.6 million loss

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Virgin Australia has increased its full year net loss more than three-fold to $355.6 million.

The airline also announced that it had sold a 35 per cent stake in its frequent flyer program to private equity firm Affinity Equity Partners for $960 million.

Virgin chief executive John Borghetti said the last year had been one of the most difficult operating environments in the history of Australian aviation.

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Virgin’s underlying loss before tax of $211.7 million was in line with expectations, it said.

The higher statutory loss after tax included asset impairment of $56.9 million and restructuring costs of $117.3 million.

The company did not provide any financial guidance or capacity growth for fiscal year 2015 because of what it said was the uncertain economic environment.

Virgin was in the middle of its five-year program to generate $1 billion in productivity gains by June 2017, it said.
It blamed the result on the capacity war with rival Qantas, weak consumer sentiment, continued economic uncertainty and the $51.6 million cost of the carbon tax.

Its costs increased by 3.4 per cent.

Qantas posted a record $2.8 billion loss on Thursday, skewed by a $2.6 billion writedown to the value of the airline’s international fleet.

The sale of the frequent flyer stake will power growth in it and earn Virgin $336 million, it said.

Virgin’s increased its domestic capacity during the year, with available seat km (ASKs) rising to 26.4 million kilometres from 25.9 million kilometres.

International ASKs were down from 15.9 million kilometres to 15.8 million kilometres.

Virgin’s yield on fares increased by 1.2 per cent but that was below its overall cost increases.

Virgin’s share of the corporate and government markets for passengers had been increased to more than 25 per cent, Mr Borghetti said.
It was targeting 30 per cent by June 2017.

“While the current environment remains challenging, the Virgin Australia Group has significantly enhanced its strategic position over the last four years and is well placed to capitalise on market recovery,” Mr Borghetti said.

He said Virgin was in a “very strong strategic position in the market”.

“We have achieved our vision of becoming the airline of choice for Australia,” Mr Borghettti said.

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