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· Posted on
October 16, 2024

Virgin Australia hits a big profit after a decade in the red... and we're thinking maybe a logo change is in order?

Virgin Australia has announced a profit amounting to $519 million for the past financial year — an 18% jump on the previous year.

What's the key learning?

  • “Wet lease” is the different to a dry lease, where an airline uses another airline’s planes but uses its own crew.
  • If Qatar’s investment is approved, it could lead to 28 new flights a week to Doha from Sydney, Melbourne, Brisbane and Perth.
  • Additionally, it will fly to other routes flying from mostly Perth which Qantas has no competition for right now.

👉 Background: After years of losses, and even going into voluntary administration in April 2020, Virgin Australia was bought by Bain Capital for $3.5 billion in September 2020.

👉 What happened: Now, just four years later, Virgin Australia has announced a profit amounting to $519 million for the past financial year — an 18% jump on the previous year.

👉 What else: Now, Virgin Australia is planning to ramp up the pressure on Qantas even more if the regulators allow a sale of 25% of Virgin Australia to Qatar Airways investment. If successful, Virgin Australia will use “wet-leases” to grow its market share against Qantas.

What's the key learning?

💡Strategic investments can transform an airline's balance sheet from red to black. While Virgin Australia has already performed strongly, it now has the ability to leverage Qatar through wet leases.

💡Here's how it works:

  • Virgin sells seats on the flights operated by another carrier, like Qatar Airways
  • While it’s sold as a Virgin flight, Qatar would use its own aircraft and crew.

💡The 'wet lease' works for Qatar Airways who has capacity with a heap of plans and for Virgin Australia who can sell more flights that it can currently offer.

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