Powered by MOMENTUM MEDIA
australian aviation logo

Virgin Australia posts $69 million third quarter loss

written by Gerard Frawley | May 18, 2017

Virgin Australia’s remaining E190s are due to be withdrawn from service by the end of 2017. (Rob Finlayson)


Virgin Australia has posted a $69.0 million loss after tax for the third quarter of the 2017 financial year, pushing its losses after tax for the nine months to March 31 to $90.6 million.

The underlying loss before tax, meanwhile, was $62.3 million for the quarter and $20.2 million for the nine months, the airline group reported in a trading update to the ASX on Thursday.

Noting the third quarter is “historically” the weakest of the financial year, Virgin Australia said the result also reflects costs from its fleet simplification program, foreign exchange movements, subdued domestic market conditions, the withdrawal of Tigerair Australia from Bali and severe weather events in Queensland in March.

The weakness in the domestic and international markets is illustrated by the provisional quarterly operating statistics released with the trading update. For the third quarter group revenue passenger numbers were down one per cent compared to the third quarter of the 2016 financial year. Within that figure Virgin Australia domestic revenue passengers were down 0.4 per cent for the quarter while international revenue passengers fell 13.1 per cent. Tigerair Australia, meanwhile, saw 4.5 per cent growth in revenue passenger numbers for the quarter.

Another positive for Virgin Australia in the quarter was the continued improvement in its net debt position. The company said Group debt was reduced by over $200 million in the quarter. In all, together with accelerated debt repayments, the Virgin Australia Group’s net debt has been cut by a third, or $627 million as at March 31 when compared to June 30 2016.

==
==

Part of that debt reduction has come from the phased withdrawal of its Embraer 190 fleet, which has comprised a combination of leased and owned aircraft. In the trading update Virgin Australia said two of its six owned E190s had been sold subsequent to March 31, while the remaining four owned aircraft are contracted to be sold by June 30. All remaining E190s are due to be withdrawn from service by the end of the 2017 calendar year.

Virgin Australia is also rationalising its fleet through the disposal of all six ATR 72-500 and two ATR 72-600 turboprops, leaving just six ATR 72-600s in service. That will also allow the closure of the Brisbane ATR crew base.

The airline said the “adverse cost impact” of the E190 and ATR fleet rationalisations “will be reduced over the next 12 months as the removal of those sub-fleets progresses”.

Looking ahead Virgin Australia said based on current market conditions it expects its underlying result for the fourth quarter will “improve” on the fourth quarter of the 2016 financial year.

You need to be a member to post comments. Become a member today!

Comments (14)

  • Dunover

    says:

    The real genius is how Borghetti will put a positive spin on this outcome, so that he can soak up another $4 million bonus.

  • AJP

    says:

    What will that leave VA to use on their Canberra services which are dominated by ATR and E190? I wouldn’t expect a full 737-800 replacement of services on this notoriously difficult market which QF already dominate with their mixed bag of Q400s, 717s and 737s. Are there any views out there on what VA will do?

  • Stu Bee

    says:

    An extra row of X-factor seats should do the trick and get VA back on track

  • Adzzaman

    says:

    The link in the article cleary states that the remaining AT76’s will be used in the ACT, NSW and Vic.

  • Trash Hauler

    says:

    How is Borg still in a job. Surely the Chinese must be asking?

  • James from Sydney

    says:

    Many moons ago I said that those who favoured what JB was doing with VA should not assume that the foreign airlines who own VA will go easy on the airline when it fails. They will expect results and can be savage if it fails. We saw that happen with Air NZ and Ansett. It’s a business venture and has to make a return and if it fails they will take action that is in their interests. There is no political pressure at home to do otherwise.

  • Russell Jensen

    says:

    is it time to for them to replace JB or one of there owners to pvt the airline

  • Rocket

    says:

    … the Gold Coast Suns will win a Premiership in the AFL before this guy achieves a profit at VA.

  • Tim Canning

    says:

    As a passenger aka guest –
    I always thought Ansett. looked after me Best !
    In its heyday, prior to Air N.Z. involvement, it was a Magnificent Airline.

    QANTAS have always and still have a culture of Smugness, Arrogance and are Aloof

    JETSTAR – Its the worst.

    Virgin Australia – represent the “Spirit of Ansett” to me.
    Contemporary, Fresh, Upmarket and Comfortable. I know in recent times they have come off the boil a bit and cannot turn a profit.

    Think their new Economy X product will assist them to improve things. I hope so.

    I would like to support what John and his team have done at Virgin and feel they just have to make some fine/medium tuning as their underlying profit is heading in the right direction.

    All strength and success to you Virgin Australia !

    Tim – Gold Coast

  • Freddie

    says:

    VA are top heavy with management and sub management – all pulling huge wages for not much productivity. There are too many tiers in every Department. The front line workers do all of the heavy lifting as they are the ones who deal with the ‘guests’ face to face. They also suffer the biggest in house cuts with unproductive managers constantly nipping at their heels…..a total imbalance of productivity.

  • Richard

    says:

    need to go from Brisbane to Dunedin every 2 weeks for the next 2 years at least, but the new timings of the Virgin nonstop arriving around midnight & coming back at 8am, mean we invariably go via Auckland or Chirstchurch.

    The old timing of nonstop flights Brisbane to Dunedin, arriving around 3pm & coming home at 4pm, were perfect.

  • Ian Deans

    says:

    Will Virgin’s losses EVER end? And how does Borghetti keep his job?

  • Brian Doyle

    says:

    As I said before VA would not be in this trouble if they would of got Singapore Airlines to take over the company. It was stated that if they would of JB would of been gone and they would of put in there preferred CEO of choice.
    All I can see is that JB wasn’t given the top job with Qantas as they had known from the start that he would of underperformed.

  • Rob

    says:

    VA is becoming a joke! JB is a joke!

    Cost cutting for efficiency is one thing, but changing fleets and being top heavy with office workers and managers on huge wages is whats destroying the group!

    Too many chef’s and they are not held to account for the stuff-ups.

    Time for the board to step up and get some action happening rather than sit back and collect dividends/share payouts and board fee’s!!!

Comments are closed.

You don't have credit card details available. You will be redirected to update payment method page. Click OK to continue.