Virgin Australia reports A$3.7B profit; first in 10-years of history

December 01, 2021 07:16 PM AEDT | By Sukriti Nair

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Virgin Australia reports A$3.7B profit; first in 10-years of history — Image source: © Iwikoz6 | Megapixl.com

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Highlights

Virgin Australia reports billion-dollar profit in FY21.

An unexpected profit is grabbing all the attention to its previously loss-making business.

In its first since 2012, Virgin Australia has reported an AU$3.7 billion after-tax profit for the year ending 30 June 2021. It comes as a surprise for investors and aviation sector enthusiasts as the Company recently got sold to Bain Capital, a US-based private equity firm. It appears like a total turnaround; however, there is more to it.

How are Virgin Australia annual numbers?

The AU$3.7 billion profit for 12 months ended 30 June 2021 was an unexpected twist in the previous year's AU$3 billion loss tale.
However, if sifted through, the entire profit belongs to the AU$4.4 billion worth of creditor claims extinguished on its sale to Bain Capital in November.
In reality, the profit number is also supported by the AU$205 million accepted by Virgin Australia as JobKeeper subsidy in the FY21.
Another thing to note is Virgin's underlying before-tax loss which was at AU$76.8 million.
The before-tax loss excludes around AU$600 million worth of impairment charges, redundancies, penalties and foreign exchange losses.
In FY21, revenue fell by nearly 70% from border closures; however, Virgin claimed it could also cut expenditures by 70%.
Virgin Australia's regional operations supported Virgin's bottom line during the entire pandemic ridden year. Virgin Australia did not miss FIFO contracts with resources companies.

Where is Virgin Australia headed?

While domestic and international travel resumes, just like its peers, Virgin is also seeking a swift and noteworthy ramp-up to its business. Virgin claims to be preparing itself for a meaningful recovery in the aviation sector, improving its financial position further in the coming year. However, Omicron and evolving situation of COVID-19 is still a cause of concern.

Also Watch- Insights into the 'Future of Aviation' with Dr Oleksandra Molloy

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