Virgin Australia is hopeful its international operations will deliver a surplus over the next 12 months, with the latest financial results showing the airline en-route to achieve profitability by the end of FY17.
In its 2016 full financial results published to ASX last week, the carrier revealed a $48.8 million loss in underlying earnings before interest and tax (EBIT) for its international operations.
Despite the loss, it was actually a 30 percent improvement on the prior 12 months, which puts Virgin Australia International on track to achieve profits by the end of the 2017 financial year.
“Virgin Australia International remains on track to achieve profitability by the end of the 2017 financial year in line with our target.”
John Borghetti, Virgin Australia Chief Executive
To help get the airline into the black, Virgin Australia International has started introducing Business Class suites and Premium Economy seats on long haul aircraft such as the Boeing 777.
The carrier is also expecting to benefit from network adjustments made during the 2015/16 financial year, including the withdrawal of select Virgin flights to Bali and launching Tigerair to the island instead.
Meanwhile, Virgin Australia Domestic continued to improve financially with year-on-year growth of 45.8 percent in underlying EBIT.
Borghetti attributed ongoing improvement in yield and an increase in corporate clients for the revenue and earnings growth in domestic travel.
Tigerair also delivered profits for the first time, with underlying EBIT reaching $2.2 million, a figure expected to be achieved by the end of FY17.
Overall, the Virgin Australia Group reported an underlying profit before tax of $41 million, up $90.1 million on the prior year.
Group statutory loss after tax was $224.7 million, and was hit by $440.5 million in the Group’s restructuring and Better Business program.