Virgin Australia has posted 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 the airline.
Revenue fell 0.9% to $2.63 billion for the six months to December, dragged down by “subdued” trading conditions.
“Notwithstanding continued subdued trading conditions in the domestic market, the group has strengthened its liquidity and cash position and is ahead of schedule in the implementation of the Better Business program,” says CEO John Borghetti.
The Better Business program is ahead of schedule to hit savings of $300 million a year by the end of the 2019 financial year.
Net debt was reduced by $936.3 million, or 44.5%, to about $1.17 billion.
However, Virgin Australia Domestic’s performance was impacted by subdued trading conditions.
Underlying EBIT (earnings before interest and taxes) for domestic operations fell to $80 million from $130 million in the same six months last year, with margins squeezed to 4.5% from 7.1%.
Qantas also has been reporting weaker domestic demand. It reported a 3% fall in revenue to $3.98 billion in the September quarter from strong competition on international routes and subdued demand due to the federal election has cut into revenue.
Qantas is due to release its half year results next week.
Virgin Australia International reported an underlying profit of $0.8 million compared to a loss of $30.8 million.
In August, Virgin posted a full year loss of $224.7 million, reflecting the cost of building a more efficient airline. The result was impacted by $440.5 million in restructuring charges. Full year revenue was up 5.7% to $5.021 billion.