Virgin Australia has reported robust first-half FY26 results, with underlying EBIT up 11.7% driven by strong leisure travel and transformation gains, despite inflationary pressures.
- Underlying EBIT rises 11.7% to $490 million
- Underlying NPAT grows 20.7% to $279 million
- Revenue increases 9.3% supported by strong leisure demand
- Velocity loyalty program posts record external billings and EBIT growth
- Fleet expansion with six new Boeing 737-8 Max aircraft delivered
Strong Financial Performance Despite Inflationary Headwinds
Virgin Australia Holdings Limited has delivered a solid financial performance for the six months ended 31 December 2025, with underlying earnings before interest and tax (EBIT) climbing 11.7% to $490 million. This growth outpaced expectations despite ongoing inflationary pressures, particularly rising airport charges and maintenance costs. The airline’s revenue rose 9.3% to $3.32 billion, underpinned by robust customer demand, especially from leisure travellers, which drove a 6.4% increase in revenue per available seat kilometre (RASK).
Transformation Program and Operational Gains
The company’s ongoing Transformation Program has been a key contributor, delivering over $200 million in gross benefits during the half. These gains, combined with fuel cost savings, helped offset cost inflation and supported a 40 basis point improvement in the underlying EBIT margin to 14.8%. Operationally, Virgin Australia improved its domestic flight punctuality to 72.6% and maintained the highest completion rate among major Australian airlines at 98.5%, reflecting a strong focus on service reliability.
Velocity Loyalty Program Drives Growth
Velocity, Virgin Australia’s loyalty segment, continued its upward trajectory with record external billings growing 18.8%, contributing to a 14.8% increase in underlying EBIT to $74 million. The program expanded its membership by over 700,000 new members and enhanced its portfolio with new partners and financial services products, reinforcing its role as a significant growth driver for the Group.
Fleet Expansion and Modernisation
The airline’s fleet grew with the delivery of six Boeing 737-8 Max aircraft, bringing the total to 14 of this model, with plans for 12 more over the next year. Virgin Australia is also investing in in-flight connectivity, with Wi-Fi now installed on 80% of its Boeing 737 fleet and aiming for 90% coverage by year-end. The regional fleet is being modernised with newer Embraer E190-E2 aircraft replacing older models, supporting operational efficiency and customer experience.
Balance Sheet Strength and Outlook
Virgin Australia’s balance sheet remains robust, with net debt at $1 billion, representing a low leverage ratio of 0.9 times underlying EBITDA, below its target range. The company plans to purchase four additional Boeing 737-8 Max aircraft in the second half of FY26, with capital expenditure expected between $850 million and $950 million for the full year. Looking ahead, Virgin Australia anticipates continued revenue and EBIT growth in the second half, supported by disciplined capacity increases and further transformation benefits, despite ongoing cost pressures.
CEO Dave Emerson emphasised the airline’s commitment to balancing value, flexibility, and quality for customers while maintaining strong operational performance and competitive positioning. CFO Race Strauss highlighted the disciplined investment approach and strategic focus on core customer segments and global connectivity through partnerships.
Bottom Line?
Virgin Australia’s strong half-year results set the stage for continued growth, but rising costs and fleet investments will test its operational discipline in the months ahead.
Questions in the middle?
- How will Virgin Australia manage ongoing inflationary pressures beyond airport charges and maintenance?
- What impact will the planned fleet purchases have on leverage and shareholder returns in FY27?
- How sustainable is Velocity’s rapid growth amid evolving consumer loyalty trends?