Virgin Australia has swung to a $54.8 million profit in what the airline called its best first-half result since 2008, though market uncertainty has prevented it from providing any full-year outlook.
Virgin’s total revenue for the six months to December 31 rose 10 per cent to a record $3.07 billion, with a 2.0 per cent jump in total passenger numbers lifting it from a $10.3 million loss in the prior corresponding period.
Virgin Australia said an underlying pre-tax profit of $112.3 million – its best in 11 years – was driven by record earnings before interest and tax from its domestic business.
But outgoing chief executive John Borghetti said geopolitical tensions and continued oil price fluctuations meant the company was unable to provide any outlook beyond an anticipated seven per cent lift in third-quarter revenue.
When asked if he expected demand fall or decline over the second half of the year, Mr Borghetti told investors “ask me in July”.
Mr Borghetti steps down as CEO on March 25 and will be replaced by Paul Scurrah.
“(You’ve got) China discussions with US, elections here… there is a fair degree of uncertainty,” he said.
“Domestically we’re in good shape… what we don’t know is the stuff happening outside that could influence us and it would be wrong of us to guess”.
Virgin’s domestic passenger numbers were up 4.1 per cent, but its international segment recorded a $12 million loss despite passenger numbers rising 8.2 per cent after the start of daily flights from Sydney and Melbourne to Hong Kong.
Revenue for Virgin’s budget airline Tigerair was flat at $302 million, with higher fares offsetting a nine per cent passenger decline.
In response to Qantas taking a 20 per cent stake in Virgin’s regional partner Alliance Aviation earlier this month, Mr Borghetti said Australians needed to be wary of diminishing regional competition.
“We’ve got a good partnership with Alliance… but I think what we should worry more as Australia … is the potential for the lessening of competition that could occur, particularly in regional Australia where we don’t operate,” he said.
Virgin Australia shares climbed 6.4 per cent to 20.75 cents at 1104 AEDT on Wednesday, up from an 18-month low of 17 cents in January, but still down from 24 cents a year ago.
The company will not pay a dividend, having last done so in 2008.
VIRGIN AUSTRALIA LIFTS HY PROFIT
* First-half net profit of $54.8m vs $10.3m loss in pcp
* Underlying net profit up 37.1pct to $112.3m
* Revenue up 10pct to $3.07b
* No interim dividend, unchanged
Originally published as Clouds loom as Virgin Aus swings to profit