Virgin Australia records an operational loss of $386.7m, forecasts 2023 profit

Virgin Australia has recorded a monster operational loss over the last year, a result the airline does not want to “see again”.

Virgin Australia has posted an operational loss of more than $385m in the last financial year, a result the airline's chief executive conceded they did not want to “see again”.

As part of new financial result filings to the Australian Securities and Investments Commission on Wednesday, Virgin revealed it recorded an operational loss of $386.7m in the year to June 30, 2022.

It represents an increase of more than 400 per cent from the $76.8m loss the airline recorded the year before, though revenue experienced a sharp rise of 45 per cent to $2.2bn.

This was reflected in Virgin returning to profit in the final months of the financial year but was not enough to overcome the impact of Covid restrictions and soaring operational costs.

Virgin's operational loss was $386.7m in the last financial year. Picture: NCA NewsWire / Nicholas Eagar

Virgin Australia chief executive Jayne Hrdlicka said while it was a “good result in the context of the last year”, the airline expected to turn a profit next year.

“It’s not one we would like to see again in the future, but it’s a result that speaks to the transition out of a really tough period as an industry into a period that looks pretty bright,” she said while speaking at the Centre for Aviation conference in Adelaide on Wednesday.

“We are forecasting a profit for the 2023 financial year and a period of continued growth.”

Ms Hrdlicka said the airline would continue to look to cut down on costs as it battled rising fuel prices and staff shortages.

“We know we’ve got to continue to take costs out because inflation is coming at us faster than we can bail the water out,” she said.

These factors have led to airlines increasing their flight prices, with a report from the Australian Competition and Consumer Commission last week revealing the cheapest economy airfares have risen in price by 56 per cent from April to August.

Ms Hrdlicka said Virgin’s flights would continue to cost more but expressed confidence the airline was well prepared to deal with heavy passenger numbers during peak holiday periods.

Virgin Australia chief executive Jayne Hrdlicka said the airline would post a profit in 2023. Picture: NCA NewsWire / Damian Shaw

“We’re feeling very match fit going into the September school holidays,” she said.

“Prices are a bit higher and they will remain higher for a while because the industry has to be able to sustain the challenges we’ve got with fuel and the challenges we’ve got with productivity frankly as we work our way through the back end of the consequences of a couple of years of lockdowns.”

Virgin credited changed rules and attitudes towards Covid as the reason it experienced an improvement in profit towards the end of the financial year, as more people returned to the sky.

But it admitted these resurgent travel numbers had created issues, with airlines across the world struggling to keep up with demand due to staff shortages and the crunch during peak periods.

“There was a marked improvement in flying activity in the fourth quarter of the 2022 financial year, as consumers began to feel comfortable travelling again following domestic and international borders opening, vaccination rates continued to rise, and the Australian community began to ‘learn to live’ with Covid,” the financial report said.

Virgin experienced issues during peak holiday periods throughout 2022. Picture: NCA NewsWire / Gaye Gerard

“Over Easter, Virgin Australia recorded its busiest travel period since before the pandemic, with Easter Monday a milestone day for Virgin Australia, with the highest number of daily passengers flying since before the pandemic.

“However, similar to most airlines globally, Virgin Australia also encountered operational resilience issues – largely attributable to ongoing team member illness – resulting in material network disruption in the fourth quarter and requiring Virgin Australia to take proactive measures to reduce flying capacity in the short term.”

Originally published as Virgin Australia records an operational loss of $386.7m, forecasts 2023 profit