Virgin Australia to Cut 3% of Domestic Capacity in Australia

en.Wedoany.com Reported - On August 28, Virgin Australia announced its fiscal year 2026 results for the period ending June 30, 2026, and plans to reduce its Australian domestic capacity by 3% in the first half of fiscal year 2027. The company expects unit revenue per available seat kilometer to grow by 6% to 8% during the same period, with underlying earnings before interest and taxes remaining broadly flat compared to the first half of fiscal year 2026.

In fiscal year 2026, Virgin Australia reported underlying earnings before interest and taxes of AUD 753 million, up 13.4% year-on-year; underlying net profit after tax increased by 21.9% to AUD 404 million, while statutory net profit after tax rose 4.7% to AUD 501 million. The underlying EBIT margin stood at 12%, up 0.6 percentage points year-on-year. The company's board has declared a fully franked dividend of 7.6 Australian cents per share, with the record date set for September 15 and the payment date for October 15.

Aviation transport business underlying revenue grew 8% to AUD 6 billion, with underlying EBIT up 15.2% to AUD 616 million. The airline carried 21.3 million passengers during the year, up 3.2% year-on-year, with load factor maintained at 84.9%. Domestic capacity grew 2.9%, short-haul international capacity declined 4.5%, and overall capacity increased 1.8%; unit revenue per available seat kilometer rose 5.9%, while unit cost per available seat kilometer excluding fuel increased 7%.

The company expects fuel costs of approximately AUD 700 million in the first half of fiscal year 2027, corresponding to fuel consumption of about 3.2 million barrels. As of August 25, Virgin Australia had hedged 96% of its Brent crude oil price exposure and 20% of its refining margin exposure for the remainder of the first half. Airport charges and labor costs are expected to continue rising, and the company anticipates that unit costs excluding fuel will grow at a slower pace than unit revenue.

In fiscal year 2026, Virgin Australia took delivery of 17 new aircraft, including 13 Boeing 737-8 MAX and 4 Embraer E190-E2, bringing its Boeing 737-8 MAX fleet to 21. As of the end of June, the company operated 108 narrowbody aircraft, along with 8 domestic wet lease routes, with average fleet age declining from 13.4 years to 11.5 years.

Virgin Australia plans to purchase 5 Boeing 737-8 MAX and 2 Embraer E190-E2 aircraft in fiscal year 2027, with expected full-year capital expenditure of AUD 900 million to AUD 1 billion. By the end of June 2027, its owned fleet is expected to grow to 110 aircraft, excluding wet-leased aircraft; the proportion of owned aircraft is expected to increase to approximately 39%.