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Virgin Australia says business uptick brightens outlook
[BENGALURU] Virgin Australia Holdings Ltd said on Thursday its outlook had brightened thanks to a surge in business confidence which drove a return in corporate traffic, as it reported a smaller annual net loss after a year of cost-cutting.
In positive signs not only for Virgin but also Qantas Airways Ltd, Virgin Australia Chief Executive John Borghetti said the corporate market had improved in the fourth quarter and had maintained the momentum in the current quarter. "Business confidence seems to be running ahead of consumer confidence. That kind of translates to what we've seen in the last quarter or so. Business travel seems to have picked up more than leisure travel," he told reporters.
The statutory net loss after tax for the year to June 30 was A$185.8 million (S$200.36 million), compared with a net loss of A$224.7 million a year ago. The underlying loss before tax of A$3.7 million was better than the A$22 million average loss forecast by five analysts polled by Thomson Reuters I/B/E/S.
Virgin shares jumped as much as 5.7 per cent to an eight-week high, while the broader market gained 0.2 per cent.
Mr Borghetti said the airline, partly owned by British entrepreneur Richard Branson, was ahead of schedule on its cost-cutting programme and was increasing its targeted savings by A$50 million to A$350 million a year.
In a separate statement, Virgin said it had received authorisation from the Australian Competition and Consumer Commission for its alliance with HNA Aviation, Hong Kong Airlines and HK Express for a five-year term.
Australia's domestic aviation market has been subdued due to weak demand from corporate customers such as mining companies, as well as government travelers.
Virgin and Qantas have been cutting capacity in response, while also adding routes to China.