Etihad backed Virgin Australia continues to struggle

By AVB Staff 14 September 2017
Etihad backed Virgin Australia continues to struggle

Etihad backed Virgin Australia has posted $185 million in annual losses.

The results were the fifth consecutive annual loss by Australia's second-biggest carrier, in which Etihad has a 21 percent stake.

CEO John Borghetti says that the losses, a 17.6 percent improvement year on year, indicate that the airline is "on the right track" and making progress toward its turnaround plan announced three years ago.

The results were better than analysts expected and do provide a glimmer of hope: the airline posted positive free cash flows for the first time in five years. It has also reduced its debt liability by $300 million.

However, Borghetti declined to offer any profit guidance for 2018, indicating the airline's roller coaster year might not be over. The airline's third quarter results were its worst on record, before better than expected demand from business travellers helped buoy fourth quarter results.

Virgin Australia had been fighting a capacity war with rival Qantas Airways, which led to losses at both airlines until both airlines stopped competing on seats in 2014. 

However, Qantas has managed to regain its financial balance, even posting record profits in 2016. Virgin Australia, meanwhile, has yet to show a profit since.

Etihad is the largest stakeholder in the airline carrier which is also supported by Sir Richard Branson and Singapore Airlines.

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