Virgin Australia boast of higher EBIT as Jayne Hrdlicka pushes the case for Qatar to help tackle Qantas

Virgin Australia is claiming surging performance as it tries to build the case for Qatar Airways taking a 25 per cent stake and a stock exchange comeback.

While still not releasing its financial year accounts or statutory net profit, the debt-laden Virgin Australia says its self-styled underlying earnings before interest and tax measure rose by more than 18 per cent in 2023-24 to $519 million.

Virgin Australia chief executive Jayne Hrdlicka said the “strong performance demonstrates the ongoing success of our transformation journey, despite what has been a challenging year for our industry”.

“Continued improvement in profitability means we are well-positioned to deliver great value and choice to Australian travellers,” she said.

“It is essential to our ability to re-invest in our business and customer experience, and vigorously compete with our major competitor.”

Virgin Australia management is pushing hard on the airlines’ role as the major domestic rival to Qantas as they seek Federal Government approval for a multi-level deal with Doha-based Qatar Airways.

In addition to buying a 25 per stake in Virgin Australia, Qatar is to lease Virgin long-distance Boeing 737 aircraft, crews and major services for the Australian airline to provide services to Doha from Perth, Brisbane, Melbourne and Sydney.

While both sides are tight-lipped about the effect of this arrangement on existing services, industry analysts say Virgin’s flights were unlikely to the ambitious Qatar from cutting any of its own services to Australia.

Private equity owner Bain Capital backed away from a planned Virgin Australia float last year and is now hoping a tie-up with Qatar boosting Virgin Australia’s appeal to stock exchange investors.

The airline reported a $129m net profit in 2022-23 in what its management said was the airline’s first bottom line profit in 11 years.

After having doubled sales in 2022-23 as its enjoyed a post-COVID revival, the airline’s revenue rose a further 6.8 per cent to $5.4 billion in 2023-24. Its underlying EBIT margin rose from 8.8 per cent to 9.9 per cent in 2023-24, the airline said.

Virgin Australia management created last year’s $439 million underlying EBIT measure by adding back more than $300m of bills, including net interest costs of $102m heavily linked to its aircraft leasing liabilities.

It also added back $96m of restructuring bills, $55m for information technology upgrades, $19.9m of foreign exchange losses on lease liabilities, $19.9m of foreign exchange losses on aircraft leases and $8m of costs related to its abandoned float plans.

Bain took over Virgin Australia in 2020 after the airline was driven into administration by the coronavirus-linked flight cancellations and travel bans.