Virgin Australia pledges ‘unwavering’ focus on fiscal repair

Virgin Australia’s board has told an AGM of its disappointment with the share price, and pledged an “unwavering” focus.

Mr Borghetti said the airline’s rationalisation of its fleet was continuing. Picture: NT Airports.

Virgin Australia chair Elizabeth Bryan has pledged to maintain an “unwavering” focus on repairing the airline’s financial foundations as it continues on its recovery to profit.

Ms Bryan said the airline’s major shareholders — which include Etihad and Singapore Airlines — and board were bitterly disappointed with the company’s languishing share price and poor financial standing but that it was steadfastly focused on fixing its bottom line.

“We share your disappointment ... But all we can do is work on improving the business and let those results shine through,” Ms Bryan told a shareholder at the company’s annual meeting who had questioned the company’s poor financial results.

“We can’t magically make the share price change ... but we are working very hard.”

The airline (VAH) suffered a $224.7 million loss in the 2016 financial year as the effects of a wide ranging cost cutting program weighed on its balance sheet.

That program is aiming to achieve $300m in annual savings from 2019.

“We are an industry challenger to a much larger and iconic Australian institution; always a precarious journey,” Ms Bryan told shareholders at the company’s annual meeting in Brisbane today.

“Although we have weathered the last three years when we had to fight for our right to exist, that has of course taken its toll and we are now in the process strengthening the company and improving our financial foundation.”

Virgin chief John Borghetti said industry conditions remained tough but that the airline would continue to carefully monitor capacity to balance softening demand.

Mr Borghetti also said the airline’s rationalisation of its fleet was continuing with Virgin having sold for Embraer 190s and the sale of the fifth on track to be completed by the end of this month.

Both Mr Borghetti and Ms Bryan pointed to China as a major growth opportunity for Virgin and said the airline was working with is two major Chinese shareholders — Nanshan and HNA — to launch new services into China by July next year.

Virgin shareholders will later today vote in representatives from HNA and Nanshan to join the airline’s board.

HNA — the owner of China’s fourth-biggest carrier Hainan Airlines — has chosen its chief innovation officer Nang Qi.

Nanshan, which has sprawling interests in aluminium and property, has elected Chien-tsung Lu, who is the company’s vice-chairman of its regional airline Qingdao Airlines.

To accommodate the new additions to its board, Virgin shareholders have been asked to amend the airline’s constitution to increase the maximum ­number of directors from 10 to 15.

Virgin became 40 per cent owned by Chinese companies after it completed a $1.1 billion capital raising earlier this year to shore up its balance sheet and tackle its debt pile.

Virgin shares were 3.18 per cent stronger at 12.23pm, at 23 cents.