Virgin reports $3.7m loss, banks on strong customer service
Virgin Australia’s 2017 financial results were revealed this morning, with the airline leaning heavily on its strong customer experience after reporting a $3.7 million loss before tax.
Despite the overall Group’s loss, both Virgin Australia International and Tigerair were profitable, while Virgin’s domestic arm felt the impacts of subdued trading conditions.
The Group revenue was $5.05 million, an improvement of $26.3 million on 2016’s FY results, despite CEO John Borghetti predicting a profitable FY17.
The group statutory loss after tax came in at $185.8 million, which is an improvement of $38.9 million in 2016, which the airline attributed largely to its Better Business program; including things like fleet restructuring and fleet impairments.
The program was implemented ahead of schedule, and saw its savings target increase to $350 million per year in annual net free cash flow savings by the end of FY2019, up $50 million per year on its original target.
“The Group’s underlying performance for the 2017 financial year was affected by subdued domestic trading conditions and the impact of fleet simplification,” CEO John Borghetti said.
“The Group also concluded the first year of our three-year Better Business program, which is designed to reduce our cost base, enhance our cash flow and improve our capital position.
“The Group’s statutory result was impacted by restructuring charges predominantly from the Better Business program. While there are upfront costs associated with implementing the program, it will deliver significant, long-term cash flow savings.”
Borghetti admitted its domestic performance was affected by reduced demand for regional and corporate travel, which saw the airline “manage capacity prudently”, with sectors flown down 5.9 per cent compared to 2016.
Meanwhile, its international business delivered a $49.3 million improvement in underlying earnings before interest and tax, while Tigerair Australia’s domestic operations were also profitable, despite being impacted by its withdrawal from Bali.
But, as strongly pointed out in Virgin’s announcement, a lot of positives came from its many accolades.
Virgin scooped Best Airline and Airline Staff in the APAC region at the World Airline Awards, Best Business Class at the Airline Rating awards, and Best Domestic Airline at the recent NTIAs.
The Australian Competition and Consumer Commission (ACCC) also today authorised Virgin Australia’s strategic alliance with HNA Aviation, Hong Kong Airlines and HK Express for a five year term. This decision follows the ACCC’s decision to grant draft authorisation for the alliance in June 2017.
“Travellers are already embracing the benefits offered by the alliance, including the direct Melbourne – Hong Kong services that Virgin Australia launched last month.
“We look forward to working with our partners to strengthen the important tourism and trade connections between Australia, Hong Kong and mainland China and bring more travellers to Australia,” Borghetti said.
Borghetti said the company kept its eye on improving its balance sheet in FY17, which saw it yield positive results.
“Today, we reported the first positive free cash flow result since the 2012 financial year, and the Group’s highest reported cash balance as at 30 June.
“We have also delivered a 40.0 per cent improvement in Financial Leverage compared to the end of the 2014 financial year following an $839 million reduction in Net Debt.
“Throughout the 2017 financial year, the Virgin Australia Group continued to bring strong competition to all parts of the Australian aviation industry,” Borghetti added.
“The business also remained focused on improving the customer experience, with the launch of game-changing initiatives such as EconomyX, which has been very well received by customers and is yielding revenue growth for the company.”
Virgin also today announced it’s plan to roll out inflight Wi-Fi to international flights on the carrier’s Boeing 737, Boeing 777 and Airbus A330 fleets.
Looking forward to 2018, Borghetti said its focus was largely on the Better Business program and managing capacity in response to demand.
“We will remain firmly focused on continuing the strong momentum of the Better Business program to deliver sustainable cash flow savings,” he said.
“We will also consolidate the position we have established in the domestic market, manage capacity in response to demand, and leverage opportunities in the growing Asian and North American markets.
“Given underlying performance improvements in the fourth quarter of the 2017 financial year and based on current market conditions, we expect the positive momentum seen in the fourth quarter to continue,” he added, without providing specific forecasts.
Email the Travel Weekly team at traveldesk@travelweekly.com.au
john borghetti tigerair australia Virgin AustraliaLatest News
Sydney gets excited for Vivid at the city’s favourite entertainment venues
Get lit! Well maybe not the kiddies, but there is a heap of bright and colourful events on at Vivid Sydney 2024.
Novotel Cabramatta launch reveals the start of new hotel and F&B partnership
Brothers will offer hotels bang for their buck in Sydney's booming southwest.
Getting married? W Melbourne has three new packages perfect for the special day
The 'W' themed lights and settings are optional, we hope!
SKYE Suites gets behind Australian Fashion Week, partners with Shark Beauty
SKYE Suites has partnered with IMG, the owner and operator of Australian Fashion Week (AFW) as the official accommodation partner for the fourth year in a row. This year SKYE Suites will again host international fashion buyers, designers, and models and are delighted to have Shark Beauty, an innovator in the personal care industry with their […]
Western Sydney Tourism unveils fresh board ahead of ’26 airport opening
'Connect-Stay-Experience', that's the Western Sydney's tourism taskforce's motto. We sort of prefer 'West Is Best'!
From Olympians to mindset coaches, Helloworld’s OMC conference wraps in style
Say hello to a good time and make sure you're at 2025's edition!
2024 Green Revolution Summit brings travel heavyweights into green fuel discussion
It's almost like the organisers read our article on sustainable fuel this week.
Aussies a hit on the conference floor for IPW 2024
Diana Ross on opening night, Keanu's Dogstar band and a dozen lobster rolls. All in a week's work at IPW 2024.
Premium hotel operator ERDI launches it’s own academy in heart of Melbourne
ERDI expects to be shaken not stirred with the launch of its ERDI Academy in its Melbourne hotels.
Tropical North Queensland action-packed events calendar for adventure enthusiasts
Hanging out for that next dose of adrenaline? It's time for you to head north!
Fiji Tourism Exchange 2024 opens with a vibrant ceremony at Sofitel Fiji Resort, Denarau
Two days in Fiji! If you didn't attend this conference we're sure you've got FOMO.
$230m joint Novotel & ibis Styles Melbourne Airport hotel prepares to open
Dear all business travellers, you're Melbourne experience just got a whole lot better.
IPW 2024: 960,000 Aussies took the trek to the Land of the Free last year
Nearly 6,000 travel industry reps descend on LA. Thankfully for all of their bosses, it's not in Vegas.
Travel DAZE Exec Agenda REVEALED: top execs to speak on airline competition
As the industry reels from Bonza's implosion, it is more important than ever to ask the big questions.
Skroo says Rex will need deep pockets to fill lost Bonza slots
The door is open for Rex, and anyone else who wants to launch a regional Aussie airline...
Hilton Expands Presence in North Queensland with the signing of Hilton Garden Inn Townsville
Heading to a North Queensland Cowboys clash? Hilton Garden Inn Townsville is set to open, but not until 2026.
Amy Poehler joins Vivid Sydney event
Oh Joy! Hit comedian Amy Poehler will make an emotional appearance at the Sydney Opera House for Vivid.
Emirates unveils future plans with new hub at Al Maktoum International Airport
We've also been looking into our future. It involves plenty of famils, we hope.
Two thirds of Australians support introduction of tourism tax, survey reveals
Can you guess which generation was the most outraged at the news? Hint: It is exactly who you think!
“The consumer really just wanted more classic reward availability” – customers underwhelmed by Qantas FF shakeup
All this consumer wants is to sit behind someone that doesn't push their seat back to near-horizontal levels.
Aussie travellers warned of ‘significant’ visa shifts in destinations including Chile, US and Vietnam
To be honest are biggest advice for having a layover in the US, is just don't.
Profile: Delta CEO Ed Bastian
Bastian says the airline business isn't for the faint hearted. We're sure Alan Joyce would agree!
Final Call: Travel DAZE Exec early birds are about to expire
Much like the auctioneer at the hottest sale of the year, we're giving you one more chance to jump at this deal!
Forget the weekend! Experience Gold Coast launches mid-week travel campaign
Your boss might be a bit bothered if you jet off mid-week, but you'll be the envy of all of your Instagram followers.
Victorian Tourism Industry Council warns of losing tourism dollars to NSW & QLD
Trendy cafe's hidden in CBD laneways can only get so many tourism dollars, clearly!
AIME 2024 rustles up $330m for APAC economy
This figure is a 65 per cent increase on 2023, much alike The Nibbler staff's alcohol consumption.
Amex GBT to purchase CWT for $871m
It's big deals like this that get a firm handshake - hence the sore hands over at the CWT and Amex GBT offices.
Boeing cleanout: CEO, chair to go as safety crisis plagues the manufacturer
CEOs are falling thick and fast these days. We should have started up a bingo game with their headshots in the office.
Star boss resigns, admits retaining NSW casino licence unlikely under his leadership
The CEO resigned after 18 months in the role. 'Another one bites the dust' rumoured to be heard playing in Pyrmont.
Corporate Traveller swings amateur golfers around the globe for World Golf Competition
How're your golf skills? Consider yourself a Tiger Woods or often get quadruple bogeys? We take after the latter.
Corporate travellers to spend big on Melbourne F1 despite financial pressures
Part of the attraction is sick days after the event as corporate travellers suffer creaked necks and blown eardrums.
Bonza officially kicks off Gold Coast-Darwin route
The Flying Purple Thumb is back at it with another route. We swear, we're going to make this nickname stick!
South West Sydney Tourism launches Western Sydney Tourism Awards
Penrith's 3 consecutive NRL premierships wasn't enough? The people of Western Sydney could fill the trophy cabinet more!
Hotels vs. Airbnb: Industry leaders at odds over who should pay accommodation levy
There's not as much gore in the Hotels vs. Airbnb saga as there is in Alien vs. Predator, but it's just as thrilling!
Singapore Airlines revamps premium economy with new menu, amenity kit
Felt Singapore Airlines was lacking "the sauce" (as the kids say). Bolster belief in the carrier's je na sais quoi here.
Business Events Adelaide set for 20th Destination SA event
Destination SA turns 20! Hopefully it's not celebrated with vodka cruisers and vapes like most 20th birthdays.