Virgin Australia has posted a full-year loss of $681 million, impacted by a $120 million impairment of its international business assets and deferred tax accounting write-offs for $451.9 million.
Excluding the one-off items, it swung to an underlying profit before tax of $109.6 million, boosted by record earnings in its core domestic business.
Virgin’s revenue for the year to June 30 was up 7.4 per cent to $5.42 billion and it expects revenue to increase by at least 7 per cent in the first quarter of 2018/19 financial year.
Australia’s number two airline has only reported a net profit twice this decade – $22 million profit in both 2012 and 2010.
The company said the loss was driven by a $573 million hit from accounting adjustments, including taking out $452 million in deferred tax assets from the books and a $121 million write-down in the value of its international business.
Excluding those items, underlying profit was $110 million, up from last year’s $4 million loss, and the strongest result since 2008.
Virgin Australia chief executive John Borghetti said the decision to take the accounting losses on board was prudent.
“While these adjustments have impacted our statutory result for the year, they are non-cash and have no impact on the fundamentals of the group’s underlying business,” he said.
“We are confident in the performance of the group’s underlying business and that long-term benefits from out growth plans will be delivered.”
Mr Borghetti said the company should return to profitability as early as the next half-year results early next year.
“Based on current market conditions, group revenue in the first quarter 2019 financial year is expected to grow by at least 7 per cent on the prior corresponding period,” he forecast.
“The group expects to be profitable at the underlying profit before tax and statutory levels in the first half of the 2019 financial year, notwithstanding an expected fuel price increase of $85 million.”
-With AAP, ABC