Virgin Australia chairman Elizabeth Bryan says the airline group’s three-year transformation program is yielding positive results and tracking ahead of schedule.
Writing in the company’s annual report, Bryan said Virgin Australia’s “Better Business” program and focus on improving its financial base would “help us to deliver sustainable profitability, and ultimately, returns to all of our shareholders”.
Virgin Australia was targeting $350 million in annual savings by the end of 2018/19, which was $50 million above the $300 million initial target when it was unveiled a year ago.
“The business has also made good progress in implementing the Better Business program of capital and operational initiatives and we now expect to deliver higher cash flow savings than originally targeted,” Bryan told shareholders in the annual report, released on Thursday.
In August, Virgin Australia reported a statutory after tax loss of $220.3 million for the 12 months to June 30 2017, an improvement from a loss of $260.9 million in the prior corresponding period.
The airline group said at the time the result was impacted by subdued domestic market and one-off charges as its fleet on 18 Embraer E190 regional jets and eight ATR turboprops were withdrawn.
On a more positive note, it said 2016/17 was the first positive free cash flow result since 2011/12, while its reported cash balance at June 30 2017 was the highest in its history.
“As we move through the Better Business program, these costs will subside and the company will benefit from the ongoing, sustainable savings that the program is on track to deliver,” Bryan said.
Bryan said the focus for 2017/18 would be remain on “improving our cost base, building strength in the balance sheet and growing revenue”.
“Improving cash, debt and leverage outcomes will remain a key focus and further balance sheet improvements are expected to be delivered,” Bryan said.
“In addition, the business will work to keep growing revenue. This will be done by leveraging the benefits of our strong fleet, network and product to seize growth opportunities and consolidate our market position.”