Virgin Australia expects to be cash positive again shortly

Photo: Bob Riha/WireImage

The flow of red ink at Virgin Australia is slowing.

In a trading update, Australia’s second domestic airline says it expects to report a positive free cash flow for the 2017 financial year of between $0 and $50 million.

This would be a $90 million to $140 million improvement on last year.

The airline says it will also report a higher cash balance and has continued to repay debt in the fourth quarter of the 2017 financial year.

A short time ago, Virgin shares were up 4.3% to $0.167.

The Velocity Frequent Flyer EBIT for the second half of the 2017 financial year is expected to be 10% to 13% higher than the same time last year.

For the entire 2017 financial year, Velocity’s EBIT will improve by 2% to 3% on 2016.

The Virgin Australia group will report its results for the 2017 financial year on August 10.

In May, the airline posted a statutory loss after tax of $69 million for the third quarter of the financial year. The underlying loss before tax was $62.3 million.

This compares to a $21.5 million loss for the half year to December, as its domestic business continues to be hit by subdued demand and the costs of restructuring.

For the nine months to March, the underlying loss before tax is $20.2 million and the statutory loss after tax adds up to $90.6 million.