Virgin Australia records its strongest H1 earnings in 11 years

Virgin Australia records its strongest H1 earnings in 11 years

Virgin Australia (ASX: VAH) saw its underlying earnings hit $3,071 million during the first half of FY19, an all-time record for the airline, and the strongest result since the 2008 financial year.

The company says this result was driven by strong performance in the company's domestic airline business, supported by a stable market, and buoyed by effective cost control.

Underlying profit before tax was up 37.1 per cent to $112.3 million despite $88.2 million fuel and foreign exchange headwinds.

Group CEO and managing director John Borghetti says the result has strengthened the financial foundation of the business.

"This is the group's strongest half year underlying result since the 2008 financial year and represents our improving profitability after a significant period of investment and repositioning," says Borghetti.

"We've made solid progress in strengthening the financial foundations of our business. Today's results continue to demonstrate the on-going success of our cost transformation program which is improving cash flow and reducing financial leverage to deliver sustainable profitability."

The tables have suddenly turned here for Borghetti who recently announced his successor, Paul Scurrah, after ten years of leading Virgin.

Over the last few years Virgin has struggled to turn a profit, recording a $653.3 million loss after tax in 2018, a $185.8 million loss in 2017, and a $224.7 million loss in 2016.

In 2018 Virgin also failed in an attempt to become a private company because none of its combination of majority shareholders wanted to buy the others out.

Borghetti says Scurrah is inheriting a company in good shape.

"While we are not immune from global economic changes, we have prudent hedging strategies and the right cost and efficiency programs in place to help mitigate against fuel price increases," says Borghetti.

Tigerair, Virgin's budget airline offering, reported significant improvements in its EBITDA of 135.3 per cent despite $12.7 million in fuel and foreign exchange headwinds.

Shares in Virgin Australia are up 7.69 per cent to $0.21 per share at 10.17am AEDT.

Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.

Business News Australia

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

Looking for a credit or charge card that’s built for your business? Try American Express
Partner Content
A good credit card should work for you, not against you, and let you and your business ...
American Express
Advertisement

Related Stories

Digital property investment platform PropHero raises $8m to advance global operations

Digital property investment platform PropHero raises $8m to advance global operations

A Sydney-based proptech using data and artificial intelligence (AI)...

‘One-eyed focus on profit’: The Star’s Queensland licence now also under threat

‘One-eyed focus on profit’: The Star’s Queensland licence now also under threat

The Star Entertainment Group (ASX: SGR) has been slapped with ...

ACCC cracks down on greenwashing, fake online reviews

ACCC cracks down on greenwashing, fake online reviews

The nation’s consumer watchdog is cracking down on businesses...

Dye & Durham back at the table with $1.3b bid for Link’s corporate markets business

Dye & Durham back at the table with $1.3b bid for Link’s corporate markets business

After an attempt to acquire the entirety of Link Administratio...