CANBERRA: A weak domestic market has delayed Virgin Australia’s return to profitability after the nation’s second-largest carrier reported an unexpected first-quarter loss despite improving passenger numbers and filling more seats on planes.
Virgin Australia’s thinly-traded shares fell 4.2 per cent after it reported an underlying loss of $3.6 million for the period, a decline of $12.1 millon on the previous year. Net losses, which included the impact of restructuring charges, were $34.6 million. Virgin said subdued industry trading in the domestic market hurt revenues. Larger rival Qantas also said this week domestic demand was weak, although it was seeing signs of demand returning to normal in September.
Virgin said it was reducing capacity in response to weak demand, with available seat kilometres declining 0.5 per cent in the quarter. It did not provide capacity forecasts, but said it would “exercise disciplined capacity management in line with trading conditions”. The airline has transferred some long-haul routes to Bali to its low-cost Tiger operations and pulled out of Phuket. International airfares, which makes up a small part of Virgin’s operations, have been falling due to stiff competition on long-haul routes that is eating into the profits of airlines globally, but the domestic market has been doing it tough as well.
