Virgin Australia
Virgin Australia

Virgin Australia Suffers Loss Due To Weak Demand, Restructuring

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Sydney  –  Virgin Australia suffered a net loss of 36.1 million dollars from July to Dec. 31, 2016 due to weak passenger demand and restructuring charges relating to fleet changes, the airline said on Friday.

A year earlier the airline had posted a net profit of 45.7 million dollars over the same period.

Underlying profit before tax dropped sharply to 42.3 million dollars, from 81.5 million dollars a year ago, with revenue down 0.9 per cent to 2.63 billion dollars from 2.65 billion dollars.

However, Australia’s second biggest airline, co-owned by Virgin Group founder Richard Branson, did not post an interim dividend.

Virgin Australia’s chief executive John Borghetti said weak demand was primarily due to concerns about the economy, rising house prices and a mixed jobs market.

“There is a sense of uncertainty; there is a sense of conservatism.

“I think people, generally, whether it’s corporate or leisure, are just a little bit more cautious with their spending in travel,” Borghetti told newsmen.

He added that industry conditions were not expected to improve soon.

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“I hope they turn around tomorrow, but you know I think it’s hard to see a turnaround tomorrow. I think we’re in an environment that may take a little while,’’ he said.

The airlines have also cut jobs and the number of aircraft types it operates as part of the restructuring plans announced earlier.

“It will sell six of its remaining Embraer 190 aircraft, while the delivery of its first Boeing 737MAX aircraft is delayed by about 12 months to the end of 2019,’’ the airline revealed on Friday.

It also announced plans to start flying to Hong Kong from mid-2017, after receiving approval by Hong Kong’s consumer watchdog.

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