- Virgin Australian full year statutory loss after tax of $653.3 million.
- Underlying Profit Before Tax of $109.6 million, an increase of $113.3 million.
- Revenue of $5.42 billion, up 7.4%.
Virgin Australia posted a statutory loss of $653.3 million, mainly due to accounting adjustments, but grew revenue by 7.4% to $5.42 billion on stronger domestic earnings.
And the underlying profit before tax of $109.6 million, up $113.3 million on 2017, was the highest in ten years.
“This outcome was driven by record earnings in our core domestic business, which represents two thirds of our revenue base, and supported by significant improvements in our cash and leverage results,” says CEO John Borghetti.
“Today’s financial results show that the business is in a good position to achieve sustainable profitability going forward.”
At midday, Virgin shares were down 4% to $0.24.
Virigin domestic posted a 164.9% rise in EBIT (Earnings Before Interest and Tax) to $246.1 million.
Borghetti says factors driving domestic performance include growth in the corporate and leisure markets, improved fleet utilisation, the exit of loss-making routes and disciplined capacity management.
But international EBIT fell by $13.3 million to a loss of $12.8 million, adversely impacted by fuel headwinds of $13 million, Bali volcanic activity of $10 million and startup investment in Hong Kong services.
Virgin says it expects to be profitable at the underlying profit before tax and statutory levels in the first half of the 2019 financial year despite an expected $85 million fuel price rise.
Based on current market conditions, revenue in the first quarter of 2019 year is expected to grow by at least 7%.
The total fuel cost for the 2019 financial year is expected to be $1.2 billion, up $213 million on 2018, partly driven by an increase in consumption of 5% to 6%, largely attributable to increased international flying.
Qantas also faces higher fuel prices. The fuel bill was up by almost $200 million in 2018 and it is expecting it to be $3.92 billion, up another $690 million, in 2019.
Virgin’s 2018 statutory loss after tax of $653.3 million, its sixth full year loss in a row, was impacted by major accounting adjustments following a review of asset values.
About $451.9 million in deferred tax assets have been derecognised and there has been a $120.8 million impairment of the assets of the Virgin Australia International business.
“While these adjustments have impacted our statutory result for the year, they are non-cash and have no impact on the fundamentals of the Group’s underlying business,” says Borghetti.
The company’s Better Business program is on track to deliver $400 million in annualised net cash flow savings by the end of the 2019 financial year, higher than the previous target of $350 million.
No dividends were declared.
The 2018 full year numbers:
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