Virgin Australia generated a net profit of $129 million after taxes, marking the company’s first profit in 11 years. In response to increased client demand following COVID-19, the company’s revenue more than doubled from the prior year to $5 billion. 8.8% of the revenue, or $439 million, was the underlying EBIT.
Virgin Australia’s airline division made $4,873 million, a 126% increase over the prior year. This includes flights that are regional, domestic, international, and charter. EBIT had a 7.4% margin and was $362 million.
The revenue for Velocity’s loyalty program increased by 68% to $330 million. They added a lot of members over the year, and they now have 11.5 million. The margin was 23.4% with an underlying EBIT of $77 million.
Profits increased significantly as a result of record-high demand for leisure travel, the return of SME clients to levels observed before COVID-19, as well as the slower but still considerable return of business travelers. Efforts to increase efficiency resulted in a significant increase in profitability despite increasing fuel prices. Customers are still prioritizing travel in the face of rising cost of living, and Virgin Australia continues to experience strong demand.
CEO Jan Hrdlicka said, “These results are a significant milestone for Virgin Australia.” Virgin Australia hasn’t earned a profit in 11 years, but our findings show that the company’s change is going well. We have a multi-year path ahead of us and a long-term commitment to reform.
“We are well positioned for the future by establishing a systemically lower cost base and a conservative balance sheet, as well as investing heavily in technology and our frontline,” the company said.
“Our frontline transformation investment is ongoing and aimed at improving capability, customer experience, and operational effectiveness. Our recent announcement of a $110 million cabin refurbishment, the arrival of the first of our new 737-8 aircraft, the debut of the industry-leading baggage monitoring app, and the introduction of Rapid Rebook technology all contribute to the wonderful experiences our customers have with us.
“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 offer customers the best value in the market,” said Race Strauss, Virgin Australia’s CFO.
“The business’s cost base has significantly improved in recent years, and our balance sheet is now significantly stronger.” Future transformation plans put us in a good position to control cost constraints while advancing our company, Mr. Strauss continued.
With over $1 billion in cash on the balance sheet and $2.3 billion in total debt, including leases, Virgin Australia is in a very solid capital position, offering the foundation for upcoming investments in transformation and development. Our transformation strategy is working as intended and has prepared the company for the future.
Source- Travel daily