Virgin Australia clocks first profit in 11 years as travel demand recovers

SYDNEY (Reuters): Bain Capital-owned Virgin Australia said on Tuesday that the airline returned to a profit for the first time in 11 years for fiscal 2023, buoyed by a strong recovery in travel demand following the COVID-19 pandemic.

The carrier reported a statutory net profit after tax of A$129 million ($82.93 million) for the full year ended June 30, 2023, compared with a loss of A$565.5 million in 2022.

U.S. private equity firm Bain is targeting an A$1 billion listing of Virgin on the Australian Securities Exchange next month, Reuters reported in May, citing a source with direct knowledge of the matter.

At that size, it would be the largest new share sale since GQG Partners raised A$1.18 billion in its listing in October 2021.

In January, Bain said it was exploring re-listing the carrier that it bought for A$3.5 billion including liabilities in 2020 after it was placed in voluntary administration, the closest Australian equivalent to Chapter 11 bankruptcy.

Virgin Australia now has a considerably stronger balance sheet with continued significant improvement in its cost base, CFO Race Strauss said in a statement on Tuesday.

The group revenue more than doubled to A$5 billion.

“Our balance sheet is now considerably stronger and the cost base of the business has significantly improved from recent years. Future transformation plans put us in a good position to manage cost headwinds and continue to improve our business,” Strauss added.

Airlines globally have posted robust profits in recent months after flights returned to full capacity on surging post-pandemic travel demand after the industry slid to a near halt when COVID-19 kept most carriers within closed borders in early 2020.

Virgin was upbeat on its capital position, reporting total debt including leases of A$2.3 billion and over A$1 billion of cash on the balance sheet.