Virgin Australia has posted a strong first-half result for FY26, with underlying profit for the first half of the 2026 financial year with net profit at $279 million.
The carrier credited robust leisure demand and benefits from its transformation program which offset mounting cost pressures across the aviation supply chain but CEO Dave Emerson also warned on increasing inflationary impacts.
The carrier’s underlying net profit after tax (NPAT) climbed 20.7 per cent to $279 million for the six months to 31 December 2025, while revenue increased 9.3 per cent to $3.32 billion. Underlying EBIT margin expanded 40 basis points to 14.8 per cent, reflecting improved yields and cost discipline despite higher airport charges and maintenance expenses.
Statutory NPAT came in at $341 million, down 27.9 per cent on the prior corresponding period, which had benefited from the recognition of deferred tax assets. The airline also confirmed it is now in a tax-paying position, having fully utilised tax losses following its exit from administration.
Leisure demand drives airline performance
Its Airlines segment delivered underlying EBIT of $419 million, up 13.5 per cent year-on-year, underpinned by strong leisure demand and event-driven travel. Revenue per Available Seat Kilometre (RASK) grew 6.4 per cent, supported by higher yields and commercial transformation initiatives.
Passenger numbers rose 3.4 per cent to 11.1 million for the half.
Cost per Available Seat Kilometre (CASK) increased 5.7 per cent, largely due to higher airport charges and aircraft maintenance costs, partially offset by lower fuel costs and transformation savings. Excluding fuel, CASK was up 8.7 per cent. The airline segment’s underlying EBIT margin improved to 13.1 per cent.
Virgin Australia chief executive officer and managing director Dave Emerson said the performance demonstrated the strength of the airline’s strategic focus.
“The Group’s continued strong performance clearly demonstrates that our constant focus on transformation and innovation is not only delivering strong financial outcomes but strengthens our ability to remain a robust competitor for years to come,” Emerson said.
“Virgin Australia is proud to play a critical role in delivering choice and value for Australian travellers, and we are laser-focused on serving our core customer groups of premium leisure, small and medium enterprises, and value-conscious corporates. Through careful cost management and decision making, we are striking the right balance between value, flexibility and quality, and our customers are responding well.”
Emerson noted that while demand remains resilient, industry-wide cost pressures are intensifying.
“However, cost pressures persist across the industry, with costs growing above inflation in several areas of the aviation supply chain, including airport charges and aircraft maintenance,” he said. “The broader aviation industry must remain vigilant on costs so aviation doesn’t become unaffordable for Australians.”
Operational metrics also improved, with 72.6 per cent of domestic flights departing on time, up from 71.6 per cent a year earlier. Completion rate was 98.5 per cent, slightly down on 98.7 per cent in 1HFY25 but the highest among Australia’s mainline domestic carriers. Strategic Net Promoter Score rose three points to 28.
Velocity powers ahead
The Group’s loyalty arm, Velocity Frequent Flyer, continued to be a key growth driver, delivering record external billings growth of 18.8 per cent and underlying EBIT of $74 million, up 14.8 per cent.
Active members increased 11 per cent year-on-year, with more than 700,000 new members added during the half. Growth was particularly strong across financial services products, including new co-branded credit cards and increased points transfers from bank and non-bank partners.
Velocity’s underlying EBIT margin improved 140 basis points to 30.7 per cent, reflecting EBIT growth and a slower pace of points redemption compared to earn. The company expects redemption levels to normalise over time.
Emerson said: “Our loyalty business, Velocity, continues to be a key growth driver for the Group, with growth in external billings driven primarily by financial services products.”
Fleet renewal accelerates
Fleet renewal remains central to Virgin Australia’s strategy. During the half, six Boeing 737-8 aircraft were delivered, bringing the total number of the type in the fleet to 14. A further 12 are scheduled for delivery over the next year, with nine to be purchased outright rather than leased.
At 31 December 2025, the fleet comprised 107 aircraft plus 11 domestic wet lease lines, with an average age of 12.6 years. Net debt stood at $1.0 billion, representing 0.9 times underlying EBITDA – below the airline’s 1–2 times target range.
Chief financial officer Race Strauss said the balance sheet strength provides flexibility for continued investment.
“Virgin Australia’s investment approach remains disciplined and strategic, centred on delivering positive outcomes for our customers, our people, and our shareholders,” Strauss said.
“Strong financial performance and cash generation have further strengthened the balance sheet, supporting continued investment in new fleet and value-accretive growth opportunities.”
The airline also highlighted its strategic partnership with Qatar Airways, which enhances long-haul connectivity while Virgin Australia maintains its focus on the domestic and short-haul international markets.
FY26 outlook positive
Looking ahead, Virgin Australia expects continued growth in revenue and underlying EBIT for FY26, supported by strong travel demand and further benefits from its transformation program, which is forecast to deliver more than $400 million in gross benefits this financial year.
Domestic capacity growth is expected to be between 2 and 3 per cent in the second half, with RASK growth of 3 to 4 per cent anticipated despite further airport charge increases. Leverage is projected to finish FY26 at the low end of the 1–2 times target range.
With liquidity of $1.4 billion and capital expenditure of up to $950 million planned for FY26, including aircraft purchases, Virgin Australia says it remains well positioned to balance growth, resilience and potential future shareholder returns.
As Emerson concluded: “We will continue to focus on delivering strong operational performance, exceptional customer experiences, and the multilayered benefits of our award-winning Velocity Frequent Flyer program.”
