Oil hedging spares Virgin Australia war fuel bill shock as airline pays out first dividend since relisting

Virgin Australia says fuel hedging and more fuel-efficient aircraft helped it offset the soaring price of oil following the US and Israel’s attacks on Iran earlier this year.

The airline said it would also pay out its first dividend to shareholders since its returned to the ASX in 2025 after net profit for the full year rose 4.7 per cent to $501 millon, up from $478.5m the previous year.

Underlying net profit was up almost 22 per cent to $404m while underlying earnings before interest and tax leapt 13.4 per cent to $753m.

Revenue rose 8.1 per cent to $6.3 billion as people continued to prioritise travel despite the cost-of-living crisis.

“The group delivered strong earnings growth and further margin expansion in a challenging operating environment,” Virgin said.

“This was supported by strong customer demand, disciplined capacity management, effective fuel hedging and continued benefits from the transformation program.”

Unlike its rival Qantas, which copped a hefty blow from soaring jet fuel prices after the outbreak of war in the Middle East, Virgin’s bill remained almost unchanged from a year earlier thanks to its hedging strategy.

Costs actually fell 0.1 per cent to $1.09b.

CEO Dave Emerson said Virgin had become “a stronger and more resilient airline”, withits transformation program delivering benefits of $450m.

“Our strategy is working. We have built a simpler, more focused business with a primarily domestic network, targeted short-haul international services and global connectivity through our airline partners,” he said.

“That strategy, together with the continued benefits of our transformation program, has strengthened the quality of our earnings and positioned us well for the future.

“We delivered strong earnings growth and further margin expansion despite significant inflationary pressure across the aviation supply chain and a more challenging operating environment, while continuing to invest in the long-term competitiveness of the business.”

Virgin will pay out a final dividend of 7.6¢ a share.

The airline said even with its hedging strategy, it was keeping a watching brief on fuel prices.

“Our fuel hedging strategy supported our performance during financial year 2026, and we continue to monitor market conditions every day,” Mr Emerson and chair Peter Warne said.

Virgin made strides in reliability during the year, with on-time performance at 77.1 per cent, an improvement of 30 basis points from the previous year.

“Whether it’s a family holiday, an important business meeting, or simply getting home, our guests expect their flight to operate as planned,” Mr Emerson and Mr Warne said.

“So we are proud to maintain the lowest cancellation rate of the major airlines this year.”

The airline, which services 56 domestic and 16 short-haul international routes, carried 21.3 million passengers in the year, up 3.2 per cent.

Looking ahead, the company leaders said they were optimistic about the future, although cost pressures on the airline would continue.