Air New Zealand chief executive Christopher Luxon says he is looking forward to Virgin Australia’s return to profitability in the current year and has praised the efforts of his counterpart John Borghetti in taking the fight up to Qantas.
The Kiwi flag carrier booked a booked a NZ$26 million loss in 2014/15 from its 26 per cent shareholding in Virgin Australia, a rare negative note on a day where it reported a 24 per cent increase in full year net profit to NZ$327 million.
Luxon says the Australian carrier and Air NZ’s trans-Tasman alliance partner has made great progress in 2014/15 and he is “very pleased with the momentum and the direction of where that business is going”.
“I think John Borghetti and his team have done an outstanding job and the improvement in the results over the past year have been really fantastic,” Luxon told reporters at Air NZ’s annual results presentation on Wednesday.
“I think they have done a lot of great work that they should be incredibly proud about in terms of being able take on an 800-pound gorilla in their home market.”
Virgin has guided the market to a year of profitability in 2015/16 after reporting a net loss of $93.8 million for the 12 months to June 30, an improvement of $260 million from the prior corresponding period.
Luxon, who sits on the Virgin Australia board, also described Jetstar’s move to launch regional routes with Dash 8 turboprops in New Zealand as a “macro strategic play” linked to Virgin’s competitive efforts against Qantas in Australia.
“Qantas have been quite bruised by Virgin in domestic Australia, in part by the downturn in mining, but also by a much more vigorous competitor in Virgin,” Luxon said.
“A little of this is payback for the investment in Virgin Australia challenging the heart of their home market.
“Essentially they have got spare aircraft sitting on the ground that are better flying doing something rather than sitting on the ground doing nothing.”