Virgin Blue Announces $216 Million, 92.9% Increase In Net Profit21/08/2007
Virgin Blue Holdings Limited today announced a net profit after tax of $216 million for the year ended 30 June, 2007, a 92.9% improvement on the previous year.
Earnings per share increased 92.5% from 10.7 to 20.6 cents as the airline maintained its traditional leisure market and attracted new business from the corporate sector and frequent fliers, contributing to a 16.3% improvement in revenue on 2.9% increase in production.
Net profit before a series of one-off expenses was $232 million. During the period under review Virgin Blue incurred $23 million of non-recurring pre-tax costs associated with preparations for items including its long haul international airline V Australia, the 20 Embraer E-Jet domestic growth project and the write-off related to cancellation of the reservations project.
“This result is a credit to our outstanding and dedicated team. It is the strong performance we were aiming for, and progress at the rate planned under our New World Carrier strategy,“ said Virgin Blue Chief Executive Brett Godfrey.
In recognition of the performance of the business, and in particular the contribution of our people, the Board has approved a discretionary $7.1 million profit share to our 4000 team members, who provided outstanding customer service to a record number of Guests and maintained focus on costs as we continued to evolve our business.
The summary financial results for the year are as follows:
|12 months to 30 June 2007||12 months to 30 June 2006||Change|
|Revenue||$2,169 million||$1,865 million||+16.3%|
|EBITDAR||$548 million||$388 million||+ 41.2%|
|EBIT||$324 million||$176 million||+84.0%|
|Profit before Tax (PBT)||$309 million||$165 million||+87.3%|
|Net Profit After Tax||$216 million||$112 million||+92.9%|
|Basic earnings per share||20.6 cents||10.7 cents||+92.5%|
|RASK * - total revenue||10.02 cents||8.87 cents||+13.0%|
|- scheduled revenue||9.39 cents||8.34 cents||+12.6%|
|CASK** - underlying||8.24 cents||8.03 cents||+2.6%|
* RASK – Revenue per Available Seat Kilometre **CASK – Cost per Available Seat Kilometre
Production as measured by Available Seat Kilometres (ASKs) increased by 2.9% to 21.6 billion ASKs, compared to the 12 months to 30 June 2006. Virgin Blue carried 15.3 million Guests, an increase of 7.7% on the previous year.
Total revenue increased by 16.3% to $2.17 billion, with yield increasing by 8.1 % to 11.57 cents. Revenue Passenger Kilometres (RPKs) were 17.6 billion up 7.3% from the prior year. Load factor improved to 81.2%, up 3.3 points for the same period in 2006.
Scheduled revenue per available seat kilometre (RASK) which measures ticket price and passenger load movements (quality of the revenue stream) increased to 9.39 cents per ASK, an improvement of 12.6%.
Total operating costs were $1.84 billion, up by 9.3% on the prior period reflecting the increase in production and the ever present challenge of escalating fuel prices. Total CASK increased 6.1% to 8.52 cents.
During the period the average price paid for jet fuel oil increased by 7.9% to over US$81 per barrel, pushing the total fuel bill for the period to $489 million. On a production adjusted basis fuel cost $38m more in this period than the corresponding twelve months. The underlying Cost per available seat kilometre (CASK), excluding fuel price increases and the non recurring expenses such as those related to new fleet and airline ventures and the write off related to cancellation of the reservations project, increased by 2.6% to 8.24.
Balance Sheet and Cash Flow
Capital expenditure for the period was $317 million, which included the purchase of three new Boeing 737-800 aircraft. Average days operating cash reserves improved from 124 to 139 as at 30 June 2007, as cash balances increased $131 million to $704 million.
The Directors declared a fully franked ordinary dividend of 2 cents per share, payable to all shareholders recorded on the register at 5pm (AEST) on 5 September, 2007, bringing the full-year dividend to 4 cents per share.
The next 12 months will be a period of steady expansion for Virgin Blue Airlines as the three airline group enters the New Zealand domestic market for the first time, expands its Australian domestic network, continues product development and launches a fourth airline, V Australia to undertake long haul international operations.
Virgin Blue has signalled its intention to engineer a significant capacity increase over the next 18 months to accommodate growth combined with increased operational efficiency achievable by a mixed Embraer/Boeing fleet.
The airline group which now comprises Virgin Blue, Pacific Blue and Polynesian Blue, will take delivery of the first of 20 Embraer E-170 and E-190 aircraft. The Company has also leased two737-800’s to enter service in Q4 of this calendar year, retained two leased Boeing 737 aircraft due for return in 2007 and will purchase a further four 737-800 for delivery in FY08.
Both the new Embraer and Boeing 737 aircraft will be fitted with adaptable configurations to allow maximum flexibility from single class to a high density seating.
Product development will include enhancements to the Velocity Loyalty programme, a new Canberra Lounge to open in August 2007, continued installation of live2air seatback television and expansion of Sydney Airport facilities.
Preparations for the launch of trans-Pacific operations will escalate and subject to completion of the remaining regulatory requirements, V Australia will inaugurate Boeing 777-300ER international flights to the USA in the second half of 2008.
It is acknowledged that during this planned development phase as Virgin Blue invests for higher yielding returns and gears up to establish major new airline operations the company will accommodate a period of controlled increase to the cost base. Management view this transitional adaptation of business model as short term investment prior to entering higher yielding domestic and international markets. Virgin Blue continues to examine business models for an ultra low cost carrier.
The company is confident of continued strong revenue and yield improvement supported by further penetration of the corporate travel market, entry to the New Zealand domestic market and progress in the Government travel sector.
The company has continued to implement its hedging policy and for FY08 has in place currency hedging covering 77% of requirements and fuel hedging covering 49% of fuel requirements.