Virgin Australia Back in Black as FY Profit Soars 134%

Efforts to lure corporate travellers from rival airliner Qantas Airways Ltd. had definitely paid off, as Virgin Australia Holdings Ltd., Australia's second-largest airline, posted a full-year profit of AU$22.8 million (US$23.6 million), up 134 per cent from the AU$67.8 million loss a year ago.

"Our progress in attracting higher yielding corporate and government customers has been a key driver of our improved profitability," Virgin chief executive John Borghetti said in a statement.

Mr Borghetti, since assuming the top post of the Australian budget carrier in 2009, undertook a massive strategy, putting business-class seats on domestic Virgin Australia flights for the first time. A former senior Qantas executive, he also forged international alliances with Etihad Airways, Singapore Airlines, Air Newland and Delta Air Lines with an objective to break Qantas's monopoly on the profitable first-class domestic travel market.

The corporate travellers, according to Mr Borghetti, now comprise 20 per cent of the airline's domestic revenue.

"Encouragingly, over the last three months we have averaged above this level," he said. "We have changed the competitive landscape in Australian aviation."

Total revenue from ordinary activities jumped 19.7 per cent to $3.9135 billion.

However, as with last year, the company will not be extending any dividend for the period.

"In light of the continuing uncertain economic environment and the need to support our current and future strategic initiatives, we will not declare a dividend," Virgin Australia said.

Analysts and industry observers likewise believe the airline will continue to post favourable performance this year, despite not providing any profit guidance.

"We expect further earnings growth in the 2013 financial year as alliances build further traction - although upside will be held back by excess domestic capacity putting downward pressure on loads and yields," analyst Scott Carroll said in a client note this month.

Virgin Australia refused to provide profit guidance, saying the present economic environment make it tough to provide predictions.

Virgin said it hoped to increase domestic capacity by 8 to 9 per cent in the last half of calendar 2012. It also projected to add an extra AU$150 million per year in interline and codeshare revenue by 2014-15.