Virgin Australia profits double
Virgin Australia says rising profits are proof that its transition to a full service airline is paying dividends.
According to figures released today, Virgin’s net profits over the first half of the financial year rose 118 per cent to $51.8 million. Underlying pre-tax profits were up 34 per cent over the previous year to $96.1 million, exceeding market expectations. Revenue was up 18 per cent to $2.0 billion.
The airline said 17 per cent of its revenue came from the government and corporate market, up from 13 per cent in 2010/11 and a key indicator as Virgin rolls out business class cabins across its fleet and moves away from its budget carrier roots. Business and government travel has long been a cash cow for Qantas and remains a critical bulwark in its business model.
Coming a week after Qantas announced job cuts on the back of an 83 per cent drop in half yearly profits, Virgin’s news will add to the sense that the gap between the two airlines is narrowing quickly. Even still, Qantas reported underlying profits of $202 million, more than twice that of Virgin.
Both airlines continue to face difficult economic conditions. Virgin said volatile fuel prices and global uncertainty meant it was unable to forecast its full year performance, though the airline said it expected an improvement on last year.