Virgin Australia results reflect higher fuel, staff, airport and restructuring costs.
Virgin Australia has just released its half year results to 31 December 2019, along with fleet, network and capacity changes “designed to accelerate cost reduction and improve financial performance”.
The underlying profit before tax for the period was $14.5 million, but the statutory result was an $88.6 million loss including one-off costs related to the 100% acquisition of Velocity Frequent Flyer, asset write-offs and workforce reductions.
CEO Paul Scurrah said while revenue and passenger numbers had grown, “we are still in the early stages of transitioning our business to a lower cost base. Therefore, the benefits of cost changes and further revenue efficiency have yet to be realised”.
The carrier announced changes to its fleet, including accelerating the exit of seven Tigerair A320s by October 2020. Group capacity will decline by 3%, involving the withdrawal of five unprofitable Tigerair routes and a consolidation of domestic network frequencies.
Scurrah said the coronavirus situation was resulting in weakened domestic and international demand, particularly on leisure destinations, with an expected impact on overall earnings of up to $75 million in the second half of the financial year.
More details in today’s issue of Travel Daily.