Virgin Australia profits from business travelers

Associated Press

SYDNEY (AP) — Virgin Australia Holdings Ltd., the nation's second-largest airline, says it returned to profitability in the last fiscal year due to growth in the corporate travel sector.

The budget airline's net profit of 22.8 million Australian dollars ($23.6 million) posted Tuesday for the year to June 30 reversed a loss of AU$67.8 million in the previous 12 months.

Australia's largest airline, Qantas Airways Ltd., last week reported a AU$245 million annual loss in profits, hurt by rising fuel prices, a series of strikes that temporarily grounded its fleet and its struggling international division. The loss was the Australian flagship carrier's first since the government privatized it in 1995.

Virgin chief executive John Borghetti said the uncertain economic environment means the company could not provide financial guidance for the current fiscal year.

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

"This segment now makes up 20 percent of our domestic revenue and, encouragingly, over the last three months we have averaged above this level," he added.

Virgin said its partnerships with international airlines such as Singapore Airlines, Air New Zealand and Delta Air Lines had resulted in interline — travel in which the same ticket covers different legs of a journey with different airlines — and codeshare revenue more than doubling in the last financial year.

Borghetti said Virgin hoped to add an extra AU$150 million per year in interline and codeshare revenue by 2014-15.

Virgin said it expected to grow domestic capacity by 8 to 9 percent during the last half of calendar 2012.

This compared with 9.6 percent growth across Virgin's domestic network in 2011-12, when it replaced smaller Boeing 737 aircraft with wide-bodied Airbus A330s on some flights between the west coast city of Perth and Australia's east coast and increased frequencies on some key corporate routes.

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