Glass half empty or half full? One can slice and dice Virgin Australia’s bumper 2023 profit either way.
In an environment in which the Australian airline industry is under intense scrutiny around a lack of competition and elevated air fares, Virgin’s strong earnings will serve to magnify the unpleasant optics.
Bain Capital punted $3.5 billion to buy the airline from bankruptcy at a time when the implications and duration of the pandemic was unknown. It seems the risk has paid off.While higher airfares have no doubt helped boost its coffers, Virgin’s status as the underdog in a domestic aviation duopoly affords it some protection from critics.
There is plenty of accounting noise in the Virgin 2023 accounts – there are flight credits owed to customers from before the airline was placed into administration in 2020 and there are COVID credits of roughly $120 million still awaiting redemption. It had been a great airline for customers but not for shareholders. The revived Virgin is now pitched more in the middle, fewer bells and whistles but not a budget brand like Jetstar either.
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