Virgin Australia chief executive John Borghetti says the airline group is on track to return to profitability in the current financial year, reaffirming previous guidance.
Borghetti told shareholders at the company’s annual general meeting in Brisbane on Wednesday that Virgin was continuing to gain more higher-yielding customers and was “well advanced in reaching our goal of 30 per cent of our business coming from corporate and government by the end of FY17”.
“We outlined at our 2015 financial year results in August that we expected to be profitable in 2016 and deliver a return on invested capital in line with our cost of capital – and I am pleased to confirm that we remain on track to meet this target,” Borghetti said in prepared remarks.
On November 5, Virgin reported a statutory net profit after tax for the three months to September 30 2015 of $1.7 million, bouncing back into profitability following a $59.1 million statutory loss in the prior corresponding period.
Virgin said at the time yields – or average airfares per passenger – across both its Virgin and wholly-owned low-cost unit Tigerair Australia increased in the quarter, compared with the prior year, while underlying cost per available seat kilometre excluding foreign exchange and fuel were lower.
Borghetti told shareholders on Wednesday Virgin was on track to “achieve in excess of $1.2 billion in cumulative cost savings by FY17, excluding fuel pricing and hedging benefits, $200 million more than our original target of $1 billion”.
Further, the airline had “built strong momentum” in strengthening the domestic business by improving margins and enhancing yield growth, boosting revenue at its wholly-owned low-cost unit Tigerair Australia and growing earnings at its Velocity frequent flyer business while focusing on the customer experience.
The annual general meeting was the first being chaired by new chairman Elizabeth Bryan. Singapore Airlines chief executive Goh Choon Phong and Air New Zealand chief executive Christopher Luxon, who are both directors on the Virgin board, were also in attendance, as was UK-based Virgin Group representative John Moorhead.
However, Bruno Matheu was absent from the AGM, with Bryan telling shareholders the Etihad Airways representative to the board had to be called away to Europe on short notice.
Bryan, who was named as the company’s new chairman in May, told shareholders Virgin’s staff was the company’s “greatest differentiator”.
“One of the things that has impressed me most since joining Virgin Australia is the genuine warmth and dedication of its people,” Bryan said.
“I had heard about the group’s reputation for excellence in customer service, but having met more and more people from across the business, it is now clear to me why our people are the group’s greatest differentiator.”
The AGM lasted a tick over 60 minutes, with no questions from shareholders.
Bryan, along with Matheu, John Moorhead and Rob Thomas, were all re-elected to the board.