Virgin Australia has narrowed its group underlying loss before tax to $3.7 million, with a significant improvement in performance in the fourth quarter of financial year 2017, up $38.4 million on Q4 FY16. Group statutory loss after tax was $185.8 million – an improvement of $38.9 million on FY16, impacted by restructuring charges. The airline has a positive free cash flow of $34.3 million – an improvement of $126.4 million on FY16. Its closing total cash balance of $1,396.1 million as at 30 June – an improvement of $272.3 million on end of FY16. Net debt reduction was $839.0 million – including $260.0 million in accelerated debt repayments. Financial Leverage improved by 14.1 per cent on 30 June 2016 to 4.5x at 30 June 2017. Virgin Australia says its Better Business program implementation is ahead of schedule and its savings target has increased to $350 million per annum in annualised net free cash flow savings by the end of FY19.
Virgin Australia says the outlook for FY18, given the underlying performance improvement in Q4 and based on current market conditions, is positive and is expected to improve compared to Q1 FY17. The Group also expects the Better Business program to continue to track ahead of schedule in implementation and expects further balance sheet improvements to be delivered.
Virgin Australia Domestic Q4 FY17 underlying performance improved compared to Q4 FY16, with overall FY17 Underlying EBIT performance of $92.9 million, impacted by subdued trading conditions. Domestic capacity management was down 5.9 per cent in sectors flown. Virgin Australia International business is profitable, delivering $49.3 million improvement in Underlying EBIT as well as yield and RASK growth.
Group revenue was $5,047.3 million, an improvement of $26.3 million on the 2016 financial year. Group Cost per Available Seat Kilometre increased by 2.2 per cent on the 2016 financial year as a consequence of costs associated with fleet simplification and reduction in capacity to meet subdued trading conditions.
The Group’s statutory result for the 2017 financial year was impacted by restructuring charges predominantly related to the Better Business program, with the majority of charges related to fleet restructuring, fleet impairments and organisational rightsizing.
Virgin Australia Group Chief Executive Officer John Borghetti said: “As we move into the 2018 financial year, we will remain firmly focused on continuing the strong momentum of the Better Business program to deliver sustainable cash flow savings. We will also consolidate the position we have established in the domestic market, manage capacity in response to demand, and leverage opportunities in the growing Asian and North American markets. Ensuring that we continue to deliver a safe and rewarding travel experience to all of our guests is central to achieving this. It is also important that we continue to strengthen our financial foundation by continuing the positive trajectory on cash, further reducing debt and improving leverage. These actions will support future earnings growth and the delivery of long-term value for all of our shareholders.