financial results

Aug 10, 2017

Virgin Australia’s ‘guests’ are today’s winners from its losses

Australia's main airline customers continue to be 'spoiled rotten' as Virgin improves its financial situation

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

The screen on one of Virgin’s trial internet enabled jets

Virgin Australia continues to pay the price for its daring to challenge the Qantas group while its ‘guests’ reap the benefits of sustained airline competition in this country.

Those who don’t closely follow the financial media but just want Choice with a capital C can reasonably conclude that this should remain so from its full yer results to June 30 this year.

And that is whether they read stories headlining a $3.7 million underlying pre-tax loss   or an $185.8 million net loss for the period.

Virgin Australia Holding’s chief executive officer, John Borghetti, seems to be standing on reasonably firm ground in arguing that is on course for much better results, or have even turned a corner, in its quest for profitability.

But there is no such thing as truly ‘firm ground’ in the airline game. Not in demand, consumer tastes, boardroom structures, or the competing or disparate strategic interests of key stakeholders, which in VAH’s case, means Singapore Airlines, Etihad, China’s enigmatic HNA group, and the PRC conglomerate Nanshan Group.

Qantas Group at the moment is both a powerful and highly profitable enterprise, but the benefit in this for VAH is that the dominant competitor is no doubt much busier banking the money than plotting its weaker opponent’s downfall.

The risk for consumers in this situation is that competition itself might stall as a result. Virgin Australia has superior premium grade product on its Hong Kong and Los Angeles flights in the opinion of some, including this writer, and a highly credible domestic offering, but on the international routes, in its own metal, remains an almost bespoke or niche player.

Both have embraced inflight internet on all key routes,although with different technical and pricing models, with Virgin dropping a further item of clothing in its dance of the veils so to speak today by promising full international and mainline 737 jet domestic jet services in the near future.

But we wait, as more remains to be revealed by both players.

Qantas reports its full year results and no doubt, much more, on August 25.

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