Virgin Australia remains firmly in the red after troubled third quarter

CYCLONE Debbie has struck again — with Virgin Australia slumping to a big third-quarter loss. But there were other factors to blame.

TROPICAL Cyclone Debbie, Tigerair’s withdrawal from Bali and foreign exchange rates were blamed for keeping Virgin Australia firmly in the red in the third-quarter of 2016-17.

Results posted today on the Australian Securities Exchange show the airline recorded a $62.3 million underlying loss before tax, putting it $20.2 million behind for the year to date.

The statutory loss after tax for the third quarter was $69 million, $10 million more than at the same time last year, and $90.6 million for the nine months to March 31, 2017.

The trading update noted only that Virgin Australia expected fourth quarter results to improve on the previous corresponding period.

The airline would not provide any executives to comment on the results.

In 2015-16, Virgin Australia posted a $225 million net loss, compared with Qantas’s record $1.5 billion profit.

The ASX update noted that the third quarter was historically the weakest quarter for Virgin Australia.

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Virgin Australia recorded a $62.3 million underlying loss before tax, putting it $20.2 million in the red for the year to date.

But this year the airline was also impacted by “costs associated with its fleet simplification program, the adverse effects of foreign exchange fluctuations on US-dollar denominated debt and operating costs, subdued domestic industry trading conditions and the one-off revenue impact of the withdrawal of Tigerair’s Bali operations and severe Queensland weather events in March”.

Debbie that crossed the Whitsunday coast and went on to cause major flooding in southeast Queensland and northern New South Wales was last week blamed by Federal Treasurer Scott Morrison for slowing economic growth.

Virgin Australia did manage to reduce debt by more than $200 million, and made progress in implementing initiatives under the Better Business program.

All Embraer 190 operations will cease by the end of the year, with the remaining four aircraft owned by Virgin to be sold by June 30.

It is also in the process of scaling down its ATR turboprop fleet from 14 to six.

Tigerair continues to be the star performer, increasing passengers by 4.5 per cent quarter on quarter, and the revenue load factor by 3.5 per cent.

Alliance Airlines will take over four regional routes currently flown by Virgin Australia’s ATR aircraft out of Brisbane from July 16.

Operating statistics for the group show Tigerair continues to be the star performer, increasing passengers by 4.5 per cent quarter on quarter, and the revenue load factor by 3.5 per cent.

The results came despite Tigerair’s withdrawal from Bali routes — after Indonesian authorities claimed the airline was in breach of regulations.

Virgin Australia domestic saw passenger numbers remain about the same, and the revenue load factor increase just 0.5 per cent.

Virgin International continues to struggle in an environment of fierce competition and low fares, with passenger numbers down 13 per cent and the revenue load factor off 0.3 per cent.

Earlier this month, Qantas announced it was expecting to record its second biggest profit on record in 2016-17, of $1.3 to $1.4 billion.

At the close of trade yesterday, Virgin Australia shares were down 2.7 per cent to 17.5 cents.

Full-year results will be posted in August.

Originally published as Virgin Australia remains firmly in the red after troubled third quarter