Virgin’s overhaul to hit net loss

Business
Source:
The National, Thursday July 7th, 2016

Virgin Australia will book a big annual net loss after disclosing the airline’s major overhaul will cost as much as A$450 million (K1049 million) to get its house in order.
Australia’s second biggest airline is streamlining its fleet by removing smaller planes, cutting jobs and debt as it targets the lucrative Chinese market for growth.
Virgin announced the latest restructuring costs as the carrier launched its previously flagged A$852m (K1986m) capital raising, which is in addition of a recent A$159m (K371m)share placement to China’s biggest private airline operator HNA Group.
The airline will spend around half of A$1.01 billion (K2.4b) in new equity capital on repaying a shareholder loan from Air New Zealand, Etihad Airways, Singapore Airlines and Virgin Group. The remaining capital will be used to pay down debt and improve its operations.
Virgin on Wednesday reaffirmed its guidance for pre-tax underlying profit of A$30m to A$60m (K139m) for the year ended June 30, but its bottom line will be hit by costs and writedowns of between A$410 million and A$450 million. – AAP