Virgin Australia chief executive John Borghetti has sought to put a positive slant on his airline’s $98.1 million loss after tax for the 2013 financial year, highlighting both the challenges faced and achievements recorded in a pivotal year for the transformation and growth of the airline.
“While the financial results clearly did not meet our initial expectations, the 2013 financial year was a pivotal year for Virgin Australia, in which we completed our major restructuring and transformation program and reshaped the competitive landscape of the Australian aviation market, despite a very difficult economic environment and intense competition,” Borghetti said in announcing the result.
“Obviously the results were affected from controllable elements and some uncontrollable elements,” Borghetti said, noting soft economic conditions and a near $50 million impact from the carbon tax. In all, Borghetti noted, the Virgin result was affected by one-off costs of almost $100 million.
Before one-off items costs from the rollout of the new Sabre reservation system and a loss from new subsidiary Skywest (now Virgin Australia Regional Airlines), the company’s pre-tax loss amounted to $35.2 million.
“Excluding Skywest and not adjusting for approximately $25 million of waived ancillary fees, the underlying loss before tax for Virgin Australia is $72.8 million,” Borghetti noted.
Other highlights of the result included a slight rise in revenue to $4.02 billion, a slight fall in domestic passenger numbers from 16.9 million to 16.7 million in part due to the Sabre reservation system cutover, a domestic EBIT loss of $44.4 million including $8.8 million from Skywest (a $137.6 million decline on the previous year), and a $7.7 million EBIT profit for Virgin Australian International.
“By any measure the achievements of this airline and the achievements of the staff of this airline has been nothing short of outstanding,” Borghetti said, pointing to the acquisition of Skywest and of 60 per cent of Tigerair, plus Singapore Airlines joining the airline’s shareholder registry.
“So now of course we are in a good position because the end result is that we are a very strong competitor in every sector of the Australian aviation market.”