Virgin Australia Holdings Ltd. (VAH), the country’s second-largest carrier, had a smaller-than-expected annual loss as the rollout of business class services across its network helped support fares.
The net loss was A$98 million ($87 million) in the year ended June 30, the Brisbane-based company said today in a regulatory statement. That was narrower than the A$102 million average of five analyst estimates compiled by Bloomberg, and compares with a A$23 million profit a year earlier.
The carrier has taken about A$105 million in one-time costs as it took over smaller rivals, installed business-class seats and moves to a new ticketing system to take on Qantas Airways Ltd.’s 65 percent share of the Australian market. Qantas yesterday announced a return to profit as it reduced long-haul losses after canceling some unprofitable routes and tying up with Dubai’s Emirates.
“There is already evidence of revenue conditions improving,” Simon Mitchell, an analyst at UBS AG in Sydney, wrote in a note to clients on Aug. 6. Sales should “expand at a far greater pace than costs” in the year ending June 2014, he said.
Virgin rose 3.9 percent to 40.5 Australian cents in Sydney yesterday. The stock has dropped 3.6 percent this year, compared with a 9.5 percent gain in the S&P/ASX 200 index.
Last year’s capacity growth of 6.3 percent will slow to 3 percent to 4 percent in the six months ending December, the company said Aug. 5, a shift that usually lifts ticket prices.
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