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Planning is also well underway for the arrival of the 40 Boeing 737 MAX aircraft Virgin has on order, with first delivery on track for 2018, with the airline recently signing off on the seats to be installed on the aircraft.

The refleeting program in what is a somewhat compressed three-year timeframe is the latest major project for Virgin and Borghetti has no doubt that the airline’s staff, who he says have executed all the initiatives he has asked of them brilliantly since taking over as chief executive a little over six years ago, were up for this latest challenge.

“It is a significant undertaking,” Borghetti tells Australian Aviation in an interview.

“We’ve undertaken ambitious plans before in compressed timelines and done it.

“I have no doubt at all that they are absolutely up to the next phase. It is hard work? Yes. But is the company in a mood to continue these challenges and achieve them? Yes. Absolutely we are up for it. ” In addition to preparing to receive Boeing 737-800s from Virgin, Tigerair was also working with the Civil Aviation Safety Authority (CASA) to update its air operator’s certificate for international flights.

That would allow the 737s operating Tigerair’s flights to Bali from Adelaide, Melbourne and Perth, which are currently on Virgin’s AOC and flown by Virgin pilots, to be transferred over to Tigerair’s AOC.

“Work on the regulatory approvals to actually get those aircraft on the Tiger AOC is also on track, which is pleasing,” Tigerair chief executive Rob Sharp told the CAPA – Centre for Aviation Australia Pacific Aviation summit in Brisbane on August 4.

Further, Sharp said planning for crew training as the 737s arrive was currently underway.

“It is just one aircraft for one aircraft. So when an A320 departs a 737 comes in. When they come across they will be reconfigured, resprayed, new product and they will come into the Tiger fleet. ” Virgin reported a statutory net loss of $224. 7 million for the 12 months to June 30 2016, compared with a statutory net loss of $93. 8 million in the prior corresponding period.

The company said the full year result was impacted by restructuring costs and writedowns totalling $440. 5 million related to fleet changes and cost-reduction initiatives.

Underlying profit before tax, which excluded those one-off charges and was regarded as the best indication of financial performance, came in at $41 million for 2015/16, representing a return into the black after the underlying loss of $49 million in the prior year.

There was an improvement in underlying earnings before interest and tax (EBIT) at Virgin domestic, as capacity cuts focused on regional and mining-dominated routes helped improve yields, while Tigerair achieved its maiden full year profit a year earlier than forecast and earnings were also up at its frequent flyer program Velocity.

However, Virgin’s international network remained in the red, albeit with a reduced loss of $48. 8 million compared with a loss of $68. 9 million a year earlier. The international network was targeting a return to profitability by the end of 2016/17.

Virgin managed to grow its share of corporate and government travel, which represented 30 per cent of its total domestic revenue in the three-month period to June 30 2016.

However, Borghetti said there had been little improvement in consumer demand, with current trading conditions continuing to be challenging.

“The weakness that we’ve seen as a result of the election, the resources sector slowdown, we’re not seeing a pick-up from that,” he said.

Although Borghetti stopped short of saying Virgin would return to profit in 2016/17 – the airline did not offer earnings guidance for the current year – he was upbeat about how the business was performing.

“The group is delivering consistent improvement in underlying financial performance,” Borghetti said.

“The group has positive momentum and we expect this to continue in the year ahead.

“The trajectories on all the key business metrics are positive. ” While Virgin’s cost reduction program – dubbed Better Business – has resulted in some management and other job losses – Borghetti said the airline was still very much focused on growth, adding staff numbers would increase in the period ahead.

“If you say to me in 18 months are you going to have more or less staff I am going to say we are going to have more because we are growing. All the businesses are growing,” Borghetti said.

“Think about the excitement now with China. The potential of new routes, new customers on our planes etc.

“When we start operating to China, obviously there will be hundreds of people we need to employ – flight attendants, pilots, ground staff and all the things that go with it. ” The director of aviation consultancy Plane Economics, Matthew Cumberworth, said Virgin’s full year results showed the airline was “moving in the right direction but nowhere near fast enough”, noting net operating expenditure rose 10 per cent in 2015/16 compared with revenue growth of 5. 7 per cent.

“Virgin has yet to tackle the fundamental issue of costs growing faster than revenue. Until Virgin is able to gain control of its costs and reverse this situation, the airline will continue to underperform and experience cash flow issues,” Dr Cumberworth said.

Separately, a Virgin spokesperson has confirmed a report in The Australian Financial Review newspaper on August 2 that chief commercial officer Judith Crompton and chief operating officer Gary Hammes have resigned and would leave the company in September and August, respectively.

Their departure comes as Borghetti’s new hire John Thomas prepares to join Virgin as the boss of its domestic and international operations at the end of September.

Thomas, an Australian, was most recently a managing director and partner of LEK and head of Asia Pacific based in Boston, where he headed the consulting firm’s aviation and travel business. He has been credited with the introduction of checked baggage fees among US carriers.

At the time his appointment was made public at the end of June, it was understood Crompton, Hammes and chief customer officer Mark Hassell would report to Thomas under a new management structure.

In turn, this would free up Borghetti from some of the day-to-day management of the airline to focus on establishing Virgin’s operations in China and Hong Kong as part of its strategic commercial alliance with HNA Group.

It has been reported Virgin was targeting a 10 per cent reduction in management positions across the company.

Currently, Crompton is responsible for alliances, network, revenue management and sales for the airline’s domestic and international network; Hammes looks after the day-to-day running of Virgin mainline covering areas such as engineering, ground, flight and network operations, among other tasks; while Hassell oversees product and service development, marketing, brand management, customer relations, lounges, cabin crew and customer service.

Finally, Virgin Australia’s major shareholders have tightened their already strong grip on the airline after smaller shareholders largely passed on the airline group’s capital raising.

In a statement to the Australian Securities Exchange on August 2, Virgin said 89. 5 per cent of shareholders had taken up their entitlements to buy one new share for every share held at a price of 21 cents per share.

Given five entities – Etihad Airways (21. 83 per cent), Singapore Airlines (20. 09 per cent), Nanshan Group (19. 98 per cent), HNA Group (13. 04 per cent) and Sir Richard Branson’s UK-based Virgin Group (8. 66 per cent) – controlled a touch under 84 per cent of Virgin stock prior to the capital raising, the result indicated the bulk of smaller shareholders chose not to participate in the offer.

The five investors, and Air New Zealand, which held 2. 54 per cent of Virgin’s shares on issue prior to the capital raising after bailing out of the Australian carrier in June, had committed to take up their full entitlements.

Virgin will still collect the full $852 million it was seeking from the capital raising because SIA, HNA and Virgin Group made binding commitments to mop up the 424 million new shares not taken up.

Further, HNA group will receive a separate top-up placement of shares priced at 26 cents per share to lift its shareholding to 19. 2 per cent.

The $852 million capital raising, as well as a separate $159 million share placement to HNA that was completed in June, brings to $1. 1 billion Virgin has raised as part of efforts to boost its balance sheet, repay a $425 million shareholder loan and reduce debt.

Think about the excitement now with China. The potential of new routes, new customers on our planes. JOHN BORGHETTI