Virgin Australia Finally Stems the Bleeding

Shares in Virgin Australia Holdings [ASX:VAH] rose 5.71% in early trading today. Which might come as a shock, as they announced a $185.8 million loss for the financial year.

What happened?

Despite posting a significant net loss, the news is positive. Virgin has finally become cash flow positive. Something the company hasn’t been able to accomplish in the past five years, and which has been a top priority.

On top of this, the company has addressed its debt situation. CEO John Borghetti states:

We have also delivered a 40.0 per cent improvement in Financial Leverage compared to the end of the 2014 financial year following an $839 million reduction in Net Debt.

The company is finally starting to dig itself out of its precarious financial position. Which is why the market rewarded investors today. Virgin can now finally put the focus back on making a profit.

What next for Virgin?

Borghetti seems pleased with the company’s progress and remains optimistic. He notes several key objectives for Virgin’s immediate future:

We will also consolidate the position we have established in the domestic market, manage capacity in response to demand, and leverage opportunities in the growing Asian and North American markets.

It seems the current outlook points towards a promising year ahead for Virgin. With momentum behind them and a strong fourth quarter, Virgin will be looking to start the new financial year with gusto.


Ryan Clarkson-Ledward,
Junior Analyst, Money Morning

PS: If you want to lay down a little money on the hottest corner of the ASX right nowbut you dont know your way around the small-cap sectorthis report is for you. Get access now (free).

Ryan Clarkson-Ledward is an Editor at Money Morning.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan is also the Editor of Australian Small-Cap Investigator, a stock tipping newsletter that hunts down promising small-cap stocks by dissecting the latest events affecting the world.

To find out more about the publications Ryan works on and how you can subscribe, please click on the corresponding link here:

Money Morning Australia