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Virgin Australia Holdings Limited (ASX: VAH) Trading Update for the First Quarter Ending 30 September 2016

2 November 2016


Quarterly performance1

Virgin Australia Holdings Limited (Virgin Australia Group or Group) today reported an Underlying Loss Before Tax of $3.6 million for the first quarter of the 2017 financial year, a decline of $12.1 million on the prior corresponding period. This result was impacted by subdued industry trading conditions during the quarter, particularly in the domestic market, which affected revenue.

The Group’s Statutory Loss After Tax for the quarter was $34.6 million. The statutory result includes the impact of restructuring charges related to the Group’s Better Business program. The program is already generating savings in the 2017 financial year and the Group expects to deliver net free cash flow savings increasing to $300 million per annum by the end of the 2019 financial year (on an annualised basis).

Capacity is being actively managed in response to the trading environment. During the quarter, total Available Seat Kilometres declined 0.5 per cent and total sectors flown declined 2.3 per cent on the prior corresponding period. The Group will continue to exercise disciplined capacity management in line with trading conditions.

For the quarter, the Group’s total revenue passengers increased by 4.8 per cent and revenue load factor improved by 2.0 points on the prior corresponding period. Cost per Available Seat Kilometre2  for the quarter decreased compared to the prior corresponding period.

The Group has accelerated its hedging program, with approximately 90 per cent of its expected fuel consumption hedged for the 2017 financial year. In order to take advantage of ongoing lower fuel prices and provide protection against future price increases, the Group has further accelerated this program for the first half of the 2018 financial year.

The Group continues to drive structural change in its cost base through ongoing cost-saving activities and new efficiency initiatives under the Better Business program. This includes the fleet simplification programme and organisational rightsizing.

1All financial information in this release has not been audited or reviewed. For definitions, refer to page 3.
2Cost per Available Seat Kilometre excludes fuel, the impact of realised and unrealised foreign exchange, Velocity and adjusted for change in average sector length.