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Highlights
- Virgin Australia reports significant profit increase for the second consecutive year.
- Bain Capital has gained over $1 billion since acquiring Virgin Australia.
- Qatar Airways plans to acquire a 25% stake in Virgin Australia.
Virgin Australia, under the ownership of Bain Capital, has delivered another profitable year, marking a strong turnaround for the airline after it was rescued from administration during the COVID-19 pandemic. Bain Capital, which acquired the airline in 2020, has now pulled out over $1 billion from the carrier. Recent filings with the Australian Securities and Investments Commission reveal a 300% profit increase for the airline, reaching $545.4 million, driven in part by expiring flight credits.
In the 12 months ending June 30, Virgin Australia’s earnings rose 18%, marking its second year of profitability after a decade of losses. The airline generated $366.5 million in dividends for shareholders, adding to the $730 million returned last year. Bain Capital, which owns 93% of Virgin Australia, has been instrumental in steering the company back to profitability since its acquisition. Other shareholders include Britain’s Virgin Group and the Queensland Investment Corporation.
Bain Capital initially invested $700 million to acquire Virgin Australia and took on billions in liabilities during the purchase. In a recent development, Bain struck a deal to sell 25% of its stake to Qatar Airways, although the transaction is still subject to government approval. As part of this partnership, Virgin Australia will resume long-haul international flights using Qatar Airways' Boeing 777 aircraft.
The management team of Virgin Australia, including CEO Jayne Hrdlicka, CFO Race Strauss, and Velocity loyalty business chief Nick Rohrlach, earned $5.4 million in combined salaries and share-based payments during the period. Hrdlicka announced her resignation in February but remains in her position until a new CEO is appointed.
Virgin Australia's frequent flyer business played a key role in the airline's financial success, contributing significantly to its underlying earnings with a 23.8% increase in revenue. Meanwhile, its core airline operations saw a modest revenue growth of 2.6%.
While Virgin Australia saw positive results, Qantas, its main competitor, faced challenges. Qantas reported revenues of $21.9 billion and underlying earnings of $2.1 billion but experienced an 11% drop in its international division’s earnings.
Bain Capital had previously considered launching an initial public offering (IPO) for Virgin Australia, appointing several investment banks for the process. However, those plans were shelved last year.
