Virgin Australia reports $83.7 million loss in

FY2014 half-year resultsfinancial year, compared to a $23 million profit for the same period last year.

Revenue for the group had increased 5.6 per cent to $2.22 billion, from last year’s $2.10 billion.
The result highlights the difficult environment of the aviation industry. Yesterday, chief rival Qantas dominated headlines as it reported a loss of $252 million and job cuts of 5000 people as the beleaguered national airline sought to rein in costs by $2 billion.

Virgin revamped its brand three years ago. Source: News Limited

Virgin increased its domestic yield marginally but its international revenue was down. Its domestic segment made a $25.7 million profit while its international operations recorded a $29.5 million loss.
Virgin said it outperformed Qantas on revenue, yield and revenue load factor.
The airline also grew capacity across its domestic operations (excluding Tiger Airways) by 1.4 per cent.
Its cash position at the end of December was $896.4 million with an unrestricted cash position of $665.4 million. This included the $351.5 million capital raising from Virgin’s foreign backers it completed at the end of last year.

Virgin chief executive John Borghetti said the company faced “tough trading conditions”. Source: News Limited

The particulars of Australian aviation has peaked the wider community’s interest as Qantas and Virgin slug it out the media. Qantas is blaming an “anti-competitive” landscape for its woes as it highlights its ownership constraints imposed by the Qantas Sales Act. Virgin wants any government assistance such as a debt guarantee, which the government has backed away from, to be extended to the rest of the industry.
Virgin Australia chief executive John Borghetti said: “The results reflect the tough trading conditions across the entire industry for the first half of the financial year 2014.
“The Australian aviation market continues to be impacted by the significant capacity growth which occurred during the 2013 financial year, compounded by weak economic conditions and the inability to recover the cost of the carbon tax. Consequently, the Australian domestic aviation industry has made a first half loss for the first time in 20 years.”

Virgin boss John Borghetti with the airline’s staff. Source: News Limited

However, Mr Borghetti said Virgin has increased its proportion of domestic revenue for the corporate and government sector.
“Several major strategic initiatives essential to ensuring a successful and sustainable business model were executed during the first half,” he said. “At the same time, we continued to consolidate our positioning across all key market segments, including further expanding our regional network and enhancing our strong partnerships with leading global airlines, bringing significant benefits to the Australia consumer.”
Virgin, which acquired 60 per cent of Tiger Airways in July, said the performance of the budget airline had improved across metrics such as aircraft utilisation, load factors and revenue per available seat kilometre.
Virgin did not pay a dividend.
raj kishore sharma
pgdm 1st year