Virgin Australia has posted a full year net loss of $355.6 million and says conditions remain challenging in the current year.
The result was below market consensus of a $214 million loss for the 12 months to June 30 2014, according to a median of five analyst estimates gathered by Australian Aviation, and represented a deterioration from the $98 million loss in 2012/13.
Virgin said underlying profit before tax, which the airline regards as the best indication of its financial performance, came in a $211.7 million, broadly in line with market estimates of a $210 million loss.
Australia’s second largest airline group posted an underlying loss before tax of $35 million in the prior corresponding period.
Revenue rose 7.1 per cent to $4.31 billion, Virgin Australia said in a regulatory filing to the Australian Securities Exchange on Friday.
Virgin Australia chief executive John Borghetti said it was a brutal 12 months.
“The 2014 financial year has seen one of the most difficult operating environments in the history of Australian aviation,” Borghetti said in a statement.
“While the Virgin Australia group performed well in attracting high yielding passengers and containing cost growth over the full year, underlying revenue performance was impacted by the challenging operating conditions.”
Virgin did not offer profit guidance for the current financial year, citing the uncertain economic environment.
“While the current environment remains challenging, the Virgin Australia group has significantly enhanced its strategic position over the last four years and is well placed to capitalise on market recovery,” Borghetti says.
Meanwhile, Virgin said it would sell 35 per cent of its frequent flyer program Velocity to fund manager Affinity Equity Partners, subject to certain conditions including Foreign Investment Review Board approval.
The transaction gave Velocity an enterprise value of $960 million, Virgin said, and was expected to increase the company’s cash balance by $336 million.
“This transaction will allow us to accelerate the program’s strategy and realise its full potential as a world class loyalty business,” Borghetti said.
Fly into Spring with Australian Aviation’s latest print edition. Starting from $49.95 a year, you can read comprehensive coverage on all sectors of the industry to keep you in the loop. Get your hands on the subscription today. Subscribe now at australianaviation.com.au.