Cautious optimism at Virgin Group
Virgin Blue Holdings Limited today reported a net profit after tax of $62.5 million for last year’s second half, compared to a loss of $101.4 million for the prior corresponding period.
Group revenue was up 12.2% from $1.35 billion in the previous equivalent reporting period to $1.51 billion for the six months to 31 December 2009, with Underlying Profit Before Tax (PBT) of $75.6 million up 34% compared to the prior period.
The PBT Excludes Ineffective cash flow hedges and non designated derivatives (2009 and 2008) and VAustralia start up costs (2008).
Available Seat Kilometres (ASKs) increased by 24.7% to 16.4 billion compared with the six months ended 31 December 2008, while passengers carried during the six months to 31 December 2009 remained stable at 9.27 million.
Total operating expenses were $1.41 billion, up just 4.5% on the prior year against a total production increase of 24.7%. This is contrasted by total CASK, decreasing 16.2%, and CASK (excluding fuel) decreasing 4.5%.
A reduction in the average price of jet fuel of 27.5% to US$92 per barrel delivered $115 million in cost savings, whilst the underlying unit cost decreased as a result of a continued focus on cost saving initiatives and enhanced productivity across the network.
Short haul PBT was $108 million, up 126% against the prior period, while long haul V Australia delivered a loss before tax of $39 million on $117 m of revenue with load factors averaging 80.8%.
Group Chief Executive, Brett Godfrey, said that while favourable fuel movement had certainly helped, he was proud of his entire team for achieving a continued decrease in the Cost per Available Seat Kilometre, excluding fuel (CASK) of 4.5%, through cost saving initiatives and enhanced productivity across the network, during the toughest operating environment in the industry’s history:
“Any way you cut it, to continue to achieve cost reductions while we continue to grow our business and position it to rapidly and fully exploit any improvement in economic conditions demonstrates the remarkable commitment of each and every one of our team members and the resilience of our model,” he said.
To stay competitive and to meet growth expectancies, the group intends to secure additional short term domestic capacity, and has reached an in-principle agreement with Boeing for an order of up to 50 new aircraft, fitted with upgraded “Boeing Sky” interiors and performance enhancements that it says will secure significant fuel and maintenance efficiencies.
Virgin Blue confirmed its recently updated outlook for the year ending 30 June 2010: “Specifically, the company estimates that its Profit before Tax (excluding ineffective cash flow hedges and non designated derivatives) for the financial year will be in the range of $80-110 million.”
Virgin Blue Chairman Neil Chatfield said that following Brett Godfrey’s decision to retire from the company, the Board has been working with an international executive search firm to evaluate a number of high potential CEO candidates: “At the present time, the Board is working with a shortlist of candidates and expects to further update the market in the near future”.
