SYDNEY (AP) - Major shareholders in Virgin Australia Holdings Ltd., the country's No. 2 airline, have provided it with a line of credit after the carrier Friday reported a 98 million Australian dollar ($88 million) annual loss.
SYDNEY (AP) — Major shareholders in Virgin Australia Holdings Ltd., the country's No. 2 airline, have provided it with a line of credit after the carrier Friday reported a 98 million Australian dollar ($88 million) annual loss.
The loss for the year ended June 30 was a reversal from an AU$22.8 million profit the previous year. The result was in line with the company's guidance for a loss between AU$95 million and AU$110 million. The company said a difficult economy, competition with Australian flag carrier Qantas Airways Ltd. and a carbon tax was to blame.
Virgin's major shareholders have provided the airline with an AU$90 million loan facility to ease any concerns it doesn't have enough cash to support its daily operations. Air New Zealand, Etihad Airways and Singapore Airlines are each separately providing funding, with a one year loan term.
Virgin chief executive John Borghetti would not provide profit guidance for the current fiscal year, given the uncertain economic environment. But he said the company had managed to reduce costs by more than AU$60 million and that the latest year was a pivotal one for the airline.
"We completed our major restructuring and transformation program, and reshaped the competitive landscape of the Australian aviation market, despite a very difficult economic environment and intense competition," he said.
Stripping out one-off time and the recently acquired Skywest domestic airline, the underlying pre-tax loss was AU$72.8 million, down from AU$82.5 million profit in the previous year.
Revenue increased 2.6 percent to AU$4 billion, compared with a 20 percent jump recorded the year before. Net operating expenses rose 7 percent to AU$4.12 billion.
The company said it had been unable to recover AU$48 million that it paid in carbon taxes through higher ticket prices because of stiff competition in the aviation market.
The government introduced a tax of AU$23 for every metric ton of carbon dioxide emitted by major polluters in the last fiscal year. That rate rose to AU$25.40 this fiscal year, although the opposition has promised to scrap the tax if it wins elections next week.
On Thursday, Qantas reported a modest AU$5 million annual profit following a AU$245 million loss in the previous year.