Virgin Australia has narrowed its first half loss to $53.1 million following a cost cutting program and better conditions in the domestic travel market.
Virgin’s interim net loss shrank by 28.5 per cent in the half year to December 31, while revenues rose six per cent to $2.4 billion.
Chief executive John Borghetti said the airline’s financial performance had improved, driven by yield growth in the domestic market and a five-year $1 billion cost-cutting program.
Mr Borghetti added that Virgin expects to benefit from falling oil prices and is on track for a better performance in the second half of the financial year.
“These conditions have contributed to the $55.6 million improvement in the Virgin Australia Group’s underlying financial performance when compared to the corresponding half,” Borghetti said in an ASX release this morning.
“However the key driver of this improvement has been the Group’s success in executing the Virgin Vision strategy – driving sustainable cost reduction and growing yield.
“The Group has succeeded in driving domestic yield growth despite ongoing subdued consumer sentiment which continues to impact overall demand.
“The performance of the international business has been impacted by increased competitive pressure in key international markets. Virgin Australia Group will be implementing a series of initiatives to improve the performance of this business.
“Tigerair Australia has delivered an improvement in financial performance, recording a $6.7 million reduction in Loss Before Tax on the prior corresponding period and achieving profitability in the second quarter of the 2015 financial year. We expect to see continued year on year improvement,” Borghetti said.
“Strengthening our balance sheet is a key priority and the business achieved a strong total cash position of $1.1 billion in the first half of the 2015 financial year, up from $783.8 million at 30 June 2014.
“The Group remains on track to reach its target of 30 per cent of Virgin Australia domestic revenue from the Corporate and Government segment by June 30 2017.”
Borghetti added that based on the Group’s current hedging position and market rates, he expects to see further benefit in the second half of the 2015 financial year.
