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Virgin Australia has revealed that its financial standing remains “broadly in line” with its 2026 first-half financial year results, which included a $279 million underlying profit, despite the fuel crisis.
Like its rival Qantas, Virgin revealed it intends to cut back on domestic capacity and increase airfares in order to stabilise operating costs and minimise damage to its balance sheet.
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According to an announcement on the ASX, Virgin is expecting its fuel costs for the six months to December 2026 to exceed $700 million. However, the airline says that previous hedging agreements, which generally protect an airline from the true extent of price volatility, have meant that this figure remains “consistent” with earlier expectations.
However, the airline is anticipating it will see higher fuel costs through to the end of June 2027.
“Domestic demand remains resilient, with revenue performance supported by disciplined capacity management,” Virgin told its shareholders.
“Considering the high fuel and operating cost environment, Virgin Australia has adjusted capacity and airfares.”
So far, Virgin has reduced domestic capacity by 1 per cent since July this year, and will cut another 4 per cent by December.
Despite these cuts, revenue per available seat kilometre is due to increase by between 6 and 8 per cent through to December 2026.
With this strategy, Virgin is expecting its EBIT for the six months to December 2026 to be “broadly in line” with last year’s result, in which it posted a $279 million underlying profit.
Earlier this week, Qantas also announced that it would look to ease capacity growth and adjust airfares across the group, in response to increasing fuel costs.
Qantas increased its anticipated fuel costs for the six months to 31 December 2026 by around $150 million to $3.75 billion, and announced plans to ease capacity through to the end of the fiscal year.
The airline currently has around 96 per cent of its expected fuel usage hedged through to the end of June 2027.
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