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Virgin returns to profit

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Virgin Australia returns to profit
After 11 years, Australia’s second largest airline, Virgin Australia, returned to profit in 2022-2023.

Virgin raked in revenue of $5 billion and posted an after-tax net profit of $129 million.

The airline put its best result in over a decade down to record leisure travel demand, plus the return of small and medium enterprise travel alongside a slower return of corporate travel.

Virgin confirmed that it is continuing to see “healthy demand” for travel, despite cost-of-living pressures in Australia.

“These results are an important milestone for Virgin Australia,” said Virgin Australia CEO Jayne Hrdlicka.

“It has been 11 years since Virgin Australia returned a profit, and our results signal that the transformation of Virgin Australia is progressing well. We have a long-term commitment to transformation and are only part-way through this multi-year journey.

“By creating a systemically lower cost base and a conservative balance sheet as well as investing heavily in technology and our frontline, we are well positioned for the future.

“Our investment in frontline transformation continues, and is designed to boost capability, customer experience and operational efficiency. Our recent announcement of a $110m cabin upgrade, arrival of the first of our new 737-8 aircraft, market leading baggage tracking app and Rapid Rebook technology launch all help us to create experiences our guests love.

“Value and choice are core to our business and as the continuing rise in cost-of-living impacts household budgets, we believe we are well positioned to continue to provide customers with the best value in the market,” she said.

Although it is Australia’s second largest airline, Virgin currently has a fraction of the footprint of its major rival Qantas, flying 32 domestic routes and just six short haul international routes, to New Zealand, islands in the Pacific, Indonesia and Japan.

Virgin’s profit is dwarfed by that of Qantas which stood at $1.71 billion in the last financial year, but Virgin has also kept its reputation intact, while Qantas has suffered major reputational damage for some of its actions since the pandemic began.

Virgin’s return to profit comes just over three years after it went into voluntary administration at the start of the pandemic, before being bought by Bain Capital.

“Our balance sheet is now considerably stronger and the cost base of the business has significantly improved from recent years,” said Virgin Australia’s CFO Race Strauss.

“Future transformation plans put us in a good position to manage cost headwinds and continue to improve our business.

“Virgin Australia is now in a very strong capital position, with total debt including leases now $2.3 billion and over $1 billion of cash on balance sheet, providing the platform for future investment in transformation and growth. Our transformation plan is well underway and has set up the business for the future.”

The airline also reported that it had delivered $26 million in bonuses to frontline Virgin staff over 12 months.

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