{"id":506881,"date":"2026-02-27T05:24:17","date_gmt":"2026-02-27T05:24:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/506881\/"},"modified":"2026-02-27T05:24:17","modified_gmt":"2026-02-27T05:24:17","slug":"virgin-australias-half-year-profits-soar-but-cost-pressures-loom","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/506881\/","title":{"rendered":"Virgin Australia\u2019s half-year profits soar, but cost pressures loom"},"content":{"rendered":"

\"Chris<\/p>\n

Updated February 27, 2026 \u2014 11:45am,first published February 27, 2026 \u2014 9:33am<\/p>\n

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Virgin has posted a jump in half-year earnings supported by strong revenue growth and demand in the leisure sector. The company also signalled two years\u2019 worth of new initiatives for its loyalty program, Velocity.<\/p>\n

Virgin\u2019s pre-tax earnings rose 11.7 per cent to $490 million in the six months to the end of December.<\/p>\n

\"VirginVirgin chief executive Dave Emerson sent a warning on costs while hinting of more to come from Velocity.Eamon Gallagher<\/p>\n

\u201cPassenger demand remains strong, with consumers continuing to prioritise travel and connectivity, supporting the airlines segment,\u201d Virgin chief executive Dave Emerson said on Friday.<\/p>\n

The airline said that its first-half results were \u201cunderpinned\u201d by $200 million in gross benefits from continued progress in the group\u2019s transformation \u2013 a program to diversify product offerings and cut costs. With savings on fuel costs, the productivity gains partly offset inflationary headwinds, expanding the underlying pre-tax margin by 40 basis points to 14.8 per cent.<\/p>\n

Related Article\"Status<\/a><\/p>\n

Underlying net profit rose to $279 million, up 20.7 per cent on the first half. Nevertheless, the Brisbane-based airline noted that \u201ccost pressures persist across the industry\u201d and that costs were growing \u201cabove inflation in several areas\u201d, including the supply chain, \u201cairport charges and aircraft maintenance\u201d.<\/p>\n

Virgin is well hedged in fuel costs and currency \u2013 which will help to insulate it from future price shocks in those areas. On future cost pressures, Emerson singled out airport landing fees.<\/p>\n

\u201cThose have been escalating steadily,\u201d he said. \u201cThey are now our second-largest cost item, and they\u2019re projected to grow in multiples of inflation. We really need to make sure that travel remains affordable.\u201d<\/p>\n

Virgin paid $629.2 million in the first half of fiscal 2026, up $77.5 million on the first half of 2025.<\/p>\n

Two years of Velocity enhancements<\/p>\n

Speaking a day after Qantas signalled a shift in its loyalty program<\/a>, Emerson acknowledged the increasing focus on competition in this area.<\/p>\n

\"VirginVirgin Australia\u2019s Velocity program has a pipeline of initiatives.Getty Images<\/p>\n

Virgin\u2019s loyalty program Velocity will continue to \u201cbe a growth engine for us\u201d, Emerson said, with growth rates well above GDP growth.<\/p>\n

Velocity revenue grew by 18.8 per cent in the half, turning in a pre-tax profit of $74 million, a jump of 14.8 per cent over the first half of 2025. Emerson also hinted at new changes to come.<\/p>\n

Related Article\"Qantas<\/a><\/p>\n

\u201cWe have a whole raft of initiatives lined up over the next 24 months,\u201d he said, without elaborating given the \u201cvery competitive market\u201d Virgin faces against Qantas and its extensive lounge network.<\/p>\n

Earlier this week, Velocity signalled a status credit promotion allowing members to reap 125 bonus status credits on past and future bookings.<\/p>\n

The program will also have a new boss, as Andrew Cleary takes over from Nick Rohrlach.<\/p>\n

Looking ahead<\/p>\n

CFO Race Strauss said the company anticipates continued growth in both revenue and underlying earnings for fiscal 2026, \u201cdriven by strong travel demand, the impact of our transformation program, and sustained growth in Velocity\u201d.<\/p>\n

\u201cWe\u2019re confident we will continue to see earnings accretion in the second half,\u201d Strauss said.<\/p>\n

Emerson said that the benefit from Virgin\u2019s transformation plan has room to run before it becomes \u201ca little incrementally harder to find the next thing\u201d, but Virgin is \u201cnot at that point yet\u201d.<\/p>\n

\u201cThe flipside is that new technology changes that equation, and so when completely new tools like AI<\/a> come in, they can unleash a new wave of opportunity in transformation that otherwise would not have been there,\u201d the CEO said.<\/p>\n

Virgin is already using AI to support its call centre and other areas, he said.<\/p>\n

However, the total impact of AI on Virgin is as-yet unknown, said Emerson.<\/p>\n

Taxes paid<\/p>\n

Since exiting administration, Virgin has fully utilised past tax losses, and the company is in a \u201ctax paying position\u201d. Consequently, net profit after tax fell in the half by 27.9 per cent to $341 million over the first half of the 2025 financial year.<\/p>\n

Earnings per share fell 33.5 per cent over the first half of the financial year to 43\u00a2. \u201cThe changes … reflects the movement in underlying and statutory net profit after tax and the dilutionary impact of share options and share rights associated with the IPO [initial public offering],\u201d the company said.<\/p>\n

Related Article\"GDS<\/a><\/p>\n

The company, of which 30.2 per cent is owned by Bain Capital, relisted on the ASX in June.<\/p>\n

\u201cThis is the last of the tax deductions related to the administration falling off, so we\u2019re back onto a normal operating footing for Virgin,\u201d Moomoo ANZ market strategist Michael McCarthy said.<\/p>\n

\u201cOverall, the results were good. It\u2019s a tough business \u2013 airlines \u2013 and they\u2019ve managed to increase profit by more than 20 per cent. Although the operating environment has improved.<\/p>\n

\u201cVirgin has clearly trimmed its sails and is taking advantage of a better operating environment.\u201d<\/p>\n

The Market Recap newsletter is a wrap of the day\u2019s trading. Get it each weekday afternoon<\/a>.<\/p>\n

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\"ChrisChris Zappone<\/a> is a senior reporter covering aviation and business. He is former digital foreign editor.Connect via X<\/a>, Facebook<\/a> or email<\/a>.From our partners<\/p>\n","protected":false},"excerpt":{"rendered":"Updated February 27, 2026 \u2014 11:45am,first published February 27, 2026 \u2014 9:33am Save You have reached your maximum…\n","protected":false},"author":2,"featured_media":506882,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[64,63,99],"class_list":{"0":"post-506881","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-au","9":"tag-australia","10":"tag-business"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/506881","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=506881"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/506881\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/506882"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=506881"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=506881"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=506881"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}