Virgin Australia turns profit with international network growth

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Virgin Australia turned a full-year net profit of A$22.8 million ($23.7 million), as it grew its international network and brought in more corporate clients on its domestic services.

The carrier launched business class services across its domestic network last year, ending flag carrier Qantas Airways' monopoly. In the fiscal year ended 30 June, the airline carried twice the number of passengers on business class than on premium economy, compared to a year ago.

The group's yields, largely driven by strong take-up of its new business class and flexi fares, grew by 12%. Revenue from corporate and government passengers now make up 20% of its domestic revenue, a year ahead of its target.

Virgin Australia also saw its interline and codeshare revenue grow by 158% as it formed international alliances with Etihad Airways, Air New Zealand, Delta Air Lines and Singapore Airlines.

"The group's improved financial performance throughout the year demonstrates that the game change program strategy is delivering positive results despite the challenging external environment and high fuel prices," says chief executive John Borghetti.

The carrier now plans to implement a three-year business efficiency project to deliver productivity gains of around A$400 million.

"In this phase, we will also be concentrating on improving our access to global markets in order to drive further revenue growth. We estimate this work will enable us to capture an additional A$150 million per annum in interline and codeshare revenue by the end of financial year 2015," says Borghetti.

Virgin Australia plans to increase capacity in the first half of FY2013 by up to 9%.

He adds that the carrier is unable to give a profit guide for the current financial year, given the uncertain economic environment.

Virgin's results come less than a week after Qantas posted an overall loss of A$244 million in the year ended 30 June, mainly because of continuing challenges at the full-service carrier's international business. This is Qantas's first loss since 1995.