Excellent result in the present climate
extact from Bransons press conference:
Well I'm delighted to say that today we have some excellent news for the airline industry and for the Australian travelling public. For a very profitable low cost airline in Australia enables us to expand to new routes and keep airfares low.
12 months ago I set our team the following challenges:
First to bring in a profit of 100 million. (Well exceeded that by over 50% and actually made $158 million, against $47 million last year) They achieved that despite the massive cost of doubling the size of our fleet, doubling the size of our network and doubling air frequencies, taking on 1500 new staff, new terminals at most of the major airports and opening new lounges.
Secondly I asked them to keep faith with the public by keeping costs low so we could keep fares low. They achieved that by dropping fares by as much as 50%.
Thirdly they were asked to make sure they kept the youngest fleet in the world. They achieved that by purchasing many more brand new planes, taking our fleet size to 30 planes and the average of 1 ten years younger than our competitor.
Fourthly they were challenged with the task of achieving the best EBITDAR per plane of any airline in the world. This they achieved by beating Ryan Air and Jet Blue by half a million US dollars per plane and Qantas by $900 000. (Virgin Blue 5.3, Jet Blue/Ryan Air 4.8 each and Qantas 4.4 million) For interest Ryan Air still has the best EBITDAR margin in the industry at 36%. However Virgin Blue is a much younger and smaller airline with only 30 planes/average age 1 year as apposed to 9 years Ryan Air.
So everything that was asked of Brett and the team has been more than achieved.
The future looks even brighter.
The next 12 months will bring international routes.
The new terminals are attracting business travellers and this will grow market share and yield.
We will be introducing a frequent flyer program which will also attract more passengers. We will be able to grow market share. It's interesting to note that South West has well over 50% on some of it's key routes, West Jet 60% in Canada and Ansett/with it's high fares had 45% of market share 2 years ago.
There will also be considerably more growth from domestic markets. Our EBIT and our EBITDAR margins will remain either the best of the world’s low cost carriers or right up with the best. The margins will always be above Qantas and the new terminals and plane costs will not dilute margin.
Our new push into the holiday market through Virgin Blue Holidays will be another very good growth market for the airline. The market today is worth $800 million dollars.
So finally we are optimistic for 2004 despite the difficulty other airlines worldwide are experiencing.