Virgin Australia reports second consecutive annual profit ahead of possible IPO

(Reuters) – Virgin Australia said on Monday it had recorded its second consecutive annual profit and a 6.8% year-on-year increase in revenue, putting it in a stronger financial position as it looks to pursue an eventual initial public offering.

Qatar Airways said two weeks ago it would buy a 25% stake in Australia’s No. 2 carrier, which would serve as a cornerstone investment ahead of an anticipated return of Virgin Australia into public ownership.

The airline was bought by U.S. private equity firm Bain Capital after it collapsed into voluntary administration in 2020, and the key rival to Qantas Airways last year returned to profit for the first time in 11 years.

“Continued improvement in profitability means we are well-positioned to deliver great value and choice to Australian travellers,” Virgin Australia CEO Jayne Hrdlicka said in a statement. “It is essential to our ability to re-invest in our business and customer experience, and vigorously compete with our major competitor.”

Hrdlicka, who said in February she planned to step down as CEO when a replacement was found, said it had been a challenging year for the aviation industry. Chief Financial Officer Race Strauss identified cost inflation as a key challenge.

Virgin Australia did not publish after-tax profit figures, but reported underlying earnings before interest and tax of A$519 million ($350 million) for the financial year ended June 30, an increase of 18.2% over last year’s result.

Qantas in August reported a 16% drop in annual underlying earnings before tax to A$2.08 billion, which it attributed to lower fares, higher spending on customers and weaker freight revenue.

($1 = 1.4843 Australian dollars)