Virgin Australia Group, the parent company of the second largest airline in Australia, has reported $315.4 million loss within the last year, making it the seventh consecutive year of losses. To deal with increasing “headwinds”, such as rising fuel prices and currency exchange rates, the company is continuing with cost savings that include 750 job cuts.
Despite growing group revenue (up by 7.6% to $5.8 billion), Virgin Australia Group reported a $315.4 million statutory loss after tax for the full financial year, ending on June 30, 2019. The company states it was affected by “subdued” trading conditions in the past six months, as well as rising fuel, foreign exchange rates, and operational costs.
Virgin Australia Group CEO Paul Scurrah called the results “disappointing”. Despite the company’s continuously growing revenue and customer base described as “strong loyal”, Scurrah sees the need to improve financial performance, in particular, by cutting costs to “see financial benefit from the growth”.
To cope with widening losses and “headwinds” it is facing, Virgin Australia is looking for cost-saving solutions. For instance, it is to undertake capacity, network, fleet and supplier review, planning to cut some “elements” of its short-haul international and domestic network. It is also planning to simplify organizational structure and launch an “organizational rightsizing program”.
Under the latter initiative, the company is planning to ax 750 roles in corporate and head office, which it estimates will help it save $750 million per year. Reviewing current aircraft lessors, airports and other suppliers’ agreements will help save “at least” $50 million.
However, fuel and foreign exchange rates are likely to grow by another $100 million in FY2020, the company expects.
The last time Virgin Australia reported profit was back in 2012, making FY2019 the seventh consecutive year of financial losses. The previous year the group reported a statutory loss after tax of $653.3 million. In FY2017, the loss was $185.8 million, in FY2016 ‒ $224.7 million; in FY2015 ‒ $93.8 million; in FY2014 ‒ $355.6 million; and $98.1 million in FY2013.
Scurrah took over as Virgin Australia Group CEO and Managing Director in March 2019. He replaced John Borghetti.