Virgin Australia announces underlying $10.2 million profit

VIRGIN Australia boss John Borghetti has revealed how he lifted the airline back into the black after last year’s shocking $74.3 million half year loss.

Virgin pride ... John Borghetti has overseen a return to profitability for Virgin Australia. Pic: News Corp Australia

VIRGIN Australia boss John Borghetti has announced a “significant improvement” in the group’s financial performance following a half year underlying profit of $10.2 million.

The result represents a $54.5 million turnaround on the previous corresponding period.

The after tax statutory loss of $47.8 million is down from last year’s $74.3 million half year loss.

Mr Borghetti said the improvement had been driven by the group’s “disciplined execution of a five year $1 billion cost reduction strategy”.

“The group has succeeded in driving domestic yield growth despite ongoing subdued consumer sentiment which continues to impact overall demand,” he said.

He flagged a series of initiatives to improve the performance of the international business which is continuing to struggle, losing $49.5 million in the six months to December.

These include adjusting frequency and timing on Bali services, introducing business class to Trans Tasman and Pacific Island flights and consolidating LA services from three to two Australian hubs.

Mr Borghetti was under pressure to deliver a profit after Qantas indicated it was again making money within months of posting a $2.8 billion statutory loss for 2013-14.

Virgin pride ... John Borghetti has overseen a return to profitability for Virgin Australia. Pic: News Corp Australia

Although Virgin was less eager to predict its financial outlook, the carrier has achieved profit with the help of a strong second-quarter result of a $55.3 million before tax gain.

Alan Joyce will announce Qantas’s half-year results next week which are expected to see a $350 million underlying profit for the group.

Late last year Mr Borghetti expressed the view that in order to make money, you had to spend it — which is what Virgin Australia has done in recent years.

New aircraft, new branding, and upgraded airport lounges have seen the former budget carrier transform itself into a direct competitor for Qantas.

Mr Borghetti has declared their next goal is to become Australia’s “favourite” airline and be the first choice for people booking flights.

Increasing Velocity (frequent flyer) membership, expanding charter operations and steering budget carrier Tigerair back to profitability are also expected to feature strongly in today’s half-year results’ analysis.

Virgin Australia become the sole owner of Tigerair last year after paying just $1 for the final 40 per cent stake in the airline.

An underlying profit of $500,000 was recorded by Tigerair in the second quarter of 2014-15, signalling a return to the right side of the ledger for the first time since 2010.

Originally published as Virgin Australia announces underlying $10.2 million profit