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Virgin Australia expects annual loss
May 24th 2019
New CEO Paul Scurrah projects tailwinds to offset revenue growth. Read More »
New Virgin Australia CEO Paul Scurrah has changed senior management and deferred aircraft, and has now issued a stark profit warning.
Virgin told the Australian Stock Exchange that underlying earnings in FY2019, the year to June 30, will be down at least A$160 million (US$110m). Excluding fuel and foreign exchange, the result will be down at least A$100m ($69m). The comparative result in FY2018 was a profit of A$64.4m ($44m), so the implied FY2019 performance is an annual loss. Qantas has projected a lower performance, but still a profit.
International has been a weak performer for Virgin recently, but the changes are driven by the domestic market. Virgin cites weakened demand in leisure and corporate sectors due to lower business and consumer confidence, decreased consumer spending and the impact of the Federal Election. The corporate sector has seen additional headwinds including the timing of Easter and a slow recovery in business travel from the Election.
Full-year revenue growth will be 6%, but has slowed and Virgin expects revenue growth in the last months of the fiscal year, May and June, to be only 2%.
Virgin says it is responding with a network review, with some changes already implemented.
Full results will be disclosed in August.
