Virgin Australia Group anticipates stronger FY2017 after efficiency actions taken in FY2016

Virgin Australia Group reported (05-Aug-2016) the following highlights for the full year ended 30-Jun-2016:

• Virgin Australia Domestic:
• • Underlying EBIT growth of 45.8% year-on-year;
  • Strong improvement in key financial metrics of revenue per ASK (+4.8%), yield (+3.4%) and underlying EBIT margin (+1.3 percentage points);
  • Continued to grow its share of the high-yielding corporate and government segment. Segment revenue now at its highest level ever, with revenue performance in 4QFY2016, exceeding FY2017 target of 30% of total domestic revenue;
  • Launched a new terminal and lounge at Perth Airport, and an expanded lounge and Premium Entry at Brisbane Airport;
    
• Virgin Australia International:
• • Almost 30% improvement in underlying EBIT, remains on track for profitability by the end of FY2017;
  • AUD19 million (USD14.6 million) impact of Bali volcanic activity in 1HFY2016;
  • Revenue per ASK declined 1.1% and yield declined by 3.3% due to competitive pressure on capacity and pricing, particularly in 2HFY2016;
  • Started roll out of new business class suites and premium economy seats on Boeing 777 fleet during 2HFY2016;
• Tigerair Australia:
• • Reported first ever full year profit (underlying EBIT of AUD2.2 million (USD1.7 million)), one year ahead of target;
  • Revenue per ASK growth of 1% and yield growth of 1.4%;
  • Consolidated LCC market position: Total revenue passengers increased 11.6%, with RPK growth in line with capacity;
• Velocity frequent flyer programme:
• • Revenue up 37.4% and membership growth of 20%;
  • Added major airline partners and BP agreement during the year;
  • Set to meet earnings and membership target for FY2017;
• Virgin Australia Regional Airlines (VARA)/Virgin Australia Cargo:
• • VARA continued to simplify its business through actions including the decommissioning of Fokker 50 fleet;
  • VARA will look to grow its charter business through its proposed long-term strategic partnership with Alliance Aviation Services;
  • Virgin Australia Cargo on a strong customer growth trajectory, with over 100 accounts now trading directly with the business;
  • Virgin Australia Cargo entered into an exclusive five year contract with TNT, one of Australia's largest cargo customers, in Mar-2016;
  • Virgin Australia Cargo rolled out an extensive cargo handling network across Australia and the Asia Pacific, including the launch of new cargo facilities at Sydney Airport;
• Other Group business activities:
• • Optimisation of balance sheet, improvement in liquidity and reduction of debt through capital structure review and subsequent equity raising;
  • Strong focus on lowering cost base through existing efficiency activities and implementation of 'Better Business' programme of capital and operational efficiency initiatives. Group is targeting net free cash flow savings increasing to AUD300 million (USD229.7 million) p/a (annualised run rate) by the end of FY2019;
  • Development of new revenue opportunities including proposed strategic alliance with HNA to gain direct access to the Chinese travel market. [more - original PR]