Thursday, Feb 11, 2016

Dubai: Virgin Australia, owned 24.2 per cent by Etihad Airways, says it is on track to return to profitability this year after reporting its best half-year profit since 2010 on Thursday.

The airline posted a 62.5 million Australian dollar (Dh162.7 million) statutory net profit for the six months to December 31, 2016 compared to a A$47.8 million loss a year ago. Revenue increased by 11.8 per cent to A$2.7 billion, which was largely driven by a stronger performance in its domestic network that accounts for 85 per cent of all passengers.

“All fundamental business metrics are in place for the group to report a profit for the 2016 financial year,” Virgin Chief Executive John Borghetti said speaking from a press conference in Sydney, after two years of net losses.

The airline’s domestic unit, which competes with Emirates partner Qantas, made an underlying earnings before interest and tax (EBIT) profit of A$130 million, compared to A$69.7 million a year ago. Its average domestic yield rose by 9.1 per cent over the period while revenue per seat kilometre on domestic flights improved by 7.1 per cent.

The international division took a A$19.2 million hit as a result of volcanic activity delaying flights to Bali, Indonesia, contributing to an overall EBIT international loss of A$30.8 million, an improvement on the $39.5 million loss it made a year earlier. Its average yield on international flights increased by 2.9 per cent and international revenue per seat kilometre grew by 5.1 per cent.

Net benefit from the falling oil price was A$33.8 million, which Borghett said was offset by the weakening Australian dollar that has fallen by almost 7 per cent against the dollar since the start of the Australian financial year on June 1.

Etihad partnership

In the first half, Etihad added capacity on flights to Australia, including the launch of Airbus A380 services to Sydney and direct flights to Brisbane operated with a Boeing 787 Dreamliner.

Etihad is a “terrific partner,” Borghetti said responding to a Gulf News question about the contribution of the Abu Dhabi carrier over the period. He declined to state how many passengers the airlines added to its domestic network in the first half.

“We’re getting a lot of synergies with them in both revenue and cost,” he said.

Etihad and Virgin offer a combined 42 weekly services from Abu Dhabi to Australia with Etihad code-sharing on a further 99 Virgin flights around Australia and New Zealand, and Virgin code-sharing on 41 Etihad routes beyond Abu Dhabi.

But while Borghetti said the “partnership is very, very strong,” he declined to say whether there are plans to grow the relationship further with new Virgin services to Etihad’s Abu Dhabi hub beyond the three weekly flights it operates from Sydney.

Virgin shares on the Australian Stock Exchange (ASX) closed on Thursday 3 cents lower to A$0.46.

By Alexander Cornwell Staff Reporter

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