Virgin Australia loss ‘not one they want to see again’ says CEO Jayne Hrdlicka
Virgin Australia CEO Jayne Hrdlicka says an underlying loss for the 2022 financial year of $386.7m is ‘not one they want to see again’.
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Virgin Australia has posted an underlying loss of $386.7m in the year to June 30 as months of travel restrictions hurt its recovery plans.
The loss was up 400 per cent on the airline’s 2021 result of a $76.8m underlying loss, and explains why private equity owner Bain Capital is now looking at pushing a planned IPO into 2024.
Speaking at the Centre for Aviation conference in Adelaide on Wednesday, CEO Jayne Hrdlicka said the loss was a “good result in the context of the last 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,” Ms Hrdlicka said.
“We are forecasting a profit for the 2023 financial year and a period of continued growth.”
Filings with the corporate regulator showed a statutory loss of $567.9m for the year to June 30, net debt of $1.2bn and revenues rising 45 per cent to $2.2bn.
Government support totalled $258m, down from $481m in 2021, and Virgin’s loyalty program, Velocity, generated $156m in revenue.
In the same period, Qantas recorded a $1.86bn loss and Rex finished the 2022 financial year $68m in the red.
Ms Hrdlicka said Virgin Australia had “one of the strongest balance sheets in the world of aviation today with very little debt and a strong asset register”, with a fleet of 94 narrow-body jets.
Ms Hrdlicka said that, since she had taken over as CEO in November 2020, following Virgin Australia’s sale to Bain Capital, “a lot had to change and change really quickly”.
She said losses of “nearly $2bn in shareholder value” in the 10 years before Covid meant there were many things within the airline not working as they should.
“It doesn’t just happen overnight that you lose that much money in a period of time when the industry was actually making money, so we’ve had to focus on improving financial discipline,” Ms Hrdlicka said.
As well as investing significantly in IT to address “10 years” of neglect, Ms Hrdlicka said her focus was to strip costs out of the airline in order to deliver a better value proposition to passengers.
“We’re nowhere near finished taking costs out of the business,” she said.
“We’re exactly where we want to be in terms of a unit cost competitive position in the market, but we know we’ve got to continue taking costs out because inflation is coming at us faster than we can bail the water out.”
She was less forthcoming about plans to relist Virgin Australia on the ASX after previously suggesting a public float could occur as early as next year.
However, Bain managing director and Virgin chairman Ryan Cotton recently told staff it was looking at the next two to three years for listing.
“I’m done trying to polish off my crystal ball and having it work. It’s proven incredible inaccurate so we’re not going to speculate on timing,” Ms Hrdlicka said on Wednesday. “Our focus is on running the company and getting it into the best possible position for eventually down the track at some point when it makes sense, to do a public listing.”
Although higher airfares were likely to remain for some time, Ms Hrdlicka said the disruption experienced by passengers would not, thanks to increased staffing and reduced capacity.
Already, on-time performance had improved to above 70 per cent of flights, and cancellation rates were back to pre-Covid levels of under 2 per cent.
“We’re feeling very match fit going into the September school holidays,” Ms Hrdlicka 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.”
It was likely the airline would increase flying over the Christmas period to meet demand, which was “actually much higher than 2019 levels”, Ms Hrdlicka said.
Originally published as Virgin Australia loss ‘not one they want to see again’ says CEO Jayne Hrdlicka
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