Virgin Australia increasing flight offering

“These increases represent more than 52,000 additional seats on trans-Tasman and Pacific routes during the 2016 financial year”.

Investors have been eager to hear from Virgin executives about how they planned to stem losses from its global operations, which have faced stiff competition on routes to south-east Asia over the past year.

Virgin Australia says the changes are part of a process of realigning its product to a changed market where it has become one that is predominantly suited to low cost airline operations.

The decision to use Tigerair Australia on worldwide routes for the first time comes after weak demand for premium air travel from budget-conscious Bali travellers helped drag Virgin’s global division to a full year loss.

Virgin said it expected the worldwide business to be profitable by the end of the 2016-17 financial year. Up until now, the budget offshoot’s fleet has comprised just Airbus A320 aircraft but needs the flying range of the 737 to fly routes such as Melbourne-Bali.

Today’s Virgin result includes a significant improvement from its Tiger Air subsidiary which reported earnings before interest and tax growth of A$42.7 million and is also on track to profitability in the next financial year. “Based on current market conditions, all fundamental business metrics are on track for the group to return to profitability and report a return on invested capital in line with its cost of capital for the 2016 financial year”.

“While there are challenges on the global front, we are confident with our improvement plan”, said Mr Borghetti.

Borghetti said the full acquisition of Tigerair Australia had given the airline further capability to lower the group’s unit costs. It narrowed its statutory net loss to A$93.8 million from A$353.8 million a year earlier, and booked about A$60 million in savings from the decline in oil prices.

Domestic operations sprang back into the black, notching up a pleasing $111 million profit, highlighting a massive $210 million turnaround from the previous period.

Virgin turned in a better result in the fourth quarter, reducing losses to $37 million from $109 million previously.

The company said it was also on track to deliver a 20-25 percent improvement in financial leverage for the 2017 financial year.

The bottom-line loss for Australia’s second-largest airline was $94 million for the year to June, down from nearly $356 million in the red previously.