Annual Report 2018 Our Network

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Annual Report 2018 Our Network ANNUAL REPORT 2018 OUR NETWORK COPENHAGEN MOSCOW MINSK MANCHESTER DUBLIN AMSTERDAM LONDON DUSSELDORF BRUSSELS CALGARY FRANKFURT PARIS ASTANA VANCOUVER MUNICH VIENNA ZURICH GENEVA VENICE BELGRADE SEATTLE OTTAWA MILAN BOLOGNA CHANGCHUN MINNEAPOLIS MONTREAL PORTLAND TURIN GENOA SPLIT TORONTO BARCELONA FLORENCE DUBROVNIK DETROIT BARI NEWARK BOSTON ROME ISTANBUL BRINDISI CHICAGO NEW YORK MADRID NAPLES BEIJING SACRAMENTO RENO SALT LAKE CITY COLUMBUS LAMEZIA TERME SKOPJE INDIANAPOLIS PHILADELPHIA PALERMO SEOUL DENVER BALTIMORE TIANJIN SAN FRANCISCO CINCINNATI WASHINGTON (DULLES) CATANIA ATHENS XI’AN BUSAN TOKYO (NARITA) ASPEN KANSAS CITY NAGOYA OAKLAND NASHVILLE WASHINGTON (REAGAN) RABAT CHENGDU TOKYO (HANEDA) SAN JOSE LAS VEGAS MEMPHIS RALEIGH/DURHAM ISLAMABAD FUKUOKA ATLANTA BEIRUT OSAKA LOS ANGELES PHOENIX DALLAS (LOVE FIELD) CASABLANCA CHONGQING NANJING DALLAS (FORT WORTH) AMMAN LAHORE SAN DIEGO TUCSON WUHAN SHANGHAI SAN AUSTIN HANGZHOU HERMOSILLO ANTONIO ORLANDO CAIRO KUWAIT NEW KATHMANDU NANCHANG HOUSTON DAMMAM CHIHUAHUA ORLEANS TAMPA DUBAI CHANGSHA FT LAUDERDALE MEDINA BAHRAIN DELHI KUNMING FUZHOU MONTERREY RIYADH ABU DHABI MIAMI DOHA KARACHI DHAKA SHENZHEN XIAMEN LA PAZ CULIACAN MUSCAT HONOLULU JEDDAH AL AIN KOLKATA GUANGZHOU KAUAI SAN JOSE DEL CABO CANCUN MANDALAY HONG KONG GUADALAJARA AHMEDABAD MAUI PUERTO VALLARTA CHIANG MAI HAIKOU COZUMEL MUMBAI HANOI KONA VISAKHAPATNAM SANYA MEXICO CITY KHARTOUM HYDERABAD BANGKOK DA NANG HUATULCO BANGALORE YANGON MANILA SIEM REAP COIMBATORE CHENNAI NHA TRANG KOCHI PHNOM PENH KOH SAMUI HO CHI MINH CITY THIRUVANANTHAPURAM PHUKET KOTA KINABALU PENANG MALÉ COLOMBO LAGOS MEDAN BANDAR SERI BEGAWAN KUALA LUMPUR MANADO SINGAPORE KAVIENG BALIKPAPAN NAIROBI MAHE LONDOLOVIT (SEYCHELLES) KOKOPO/RABAUL SEMARANG MAKASSAR MT. HAGEN GOROKA JAKARTA SURABAYA LAE POPONDETTA BANDUNG LOMBOK YOGYAKARTA TUFI DENPASAR (BALI) PORT MORESBY (PAPUA NEW GUINEA) HONIARA (SOLOMON ISLANDS) COCOS (KEELING) ISLANDS CHRISTMAS ISLAND DARWIN APIA (SAMOA) PORT VILA (VANUATU) CAIRNS NADI (FIJI) PORT HEDLAND RAROTONGA (COOK ISLANDS) NUKU’ALOFA (TONGA) SUNSHINE COAST JOHANNESBURG BRISBANE GOLD COAST PERTH NEWCASTLE SYDNEY CAPE TOWN ADELAIDE CANBERRA AUCKLAND MELBOURNE WELLINGTON CHRISTCHURCH QUEENSTOWN DUNEDIN PNG Air Hainan Airlines Virgin Australia Hong Kong Airlines Hawaiian Airlines Virgin Atlantic Airways Air New Zealand* Singapore Airlines/SilkAir South African Airways Virgin Australia Seasonal Routes+ Delta Air Lines Air Canada AeroMexico Air New Zealand Seasonal Routes^ Etihad Airways Alitalia Air Serbia HK Express +Christchurch-Rarotonga , June-October / Auckland-Newcastle, November-February ^Auckland-Sunshine Coast, June-October * Virgin Australia’s strategic alliance with Air New Zealand will come to an end on 27 October 2018 COPENHAGEN MOSCOW MINSK MANCHESTER DUBLIN AMSTERDAM LONDON DUSSELDORF BRUSSELS CALGARY FRANKFURT PARIS ASTANA VANCOUVER MUNICH VIENNA ZURICH GENEVA VENICE BELGRADE SEATTLE OTTAWA MILAN BOLOGNA CHANGCHUN MINNEAPOLIS MONTREAL PORTLAND TURIN GENOA SPLIT TORONTO BARCELONA FLORENCE DUBROVNIK DETROIT BARI NEWARK BOSTON ROME ISTANBUL BRINDISI CHICAGO NEW YORK MADRID NAPLES BEIJING SACRAMENTO RENO SALT LAKE CITY COLUMBUS LAMEZIA TERME SKOPJE INDIANAPOLIS PHILADELPHIA PALERMO SEOUL DENVER BALTIMORE TIANJIN SAN FRANCISCO CINCINNATI WASHINGTON (DULLES) CATANIA ATHENS XI’AN BUSAN TOKYO (NARITA) ASPEN KANSAS CITY NAGOYA OAKLAND NASHVILLE WASHINGTON (REAGAN) RABAT CHENGDU TOKYO (HANEDA) SAN JOSE LAS VEGAS MEMPHIS RALEIGH/DURHAM ISLAMABAD FUKUOKA ATLANTA BEIRUT OSAKA LOS ANGELES PHOENIX DALLAS (LOVE FIELD) CASABLANCA CHONGQING NANJING DALLAS (FORT WORTH) AMMAN LAHORE SAN DIEGO TUCSON WUHAN SHANGHAI SAN AUSTIN HANGZHOU HERMOSILLO ANTONIO ORLANDO CAIRO KUWAIT NEW KATHMANDU NANCHANG HOUSTON DAMMAM CHIHUAHUA ORLEANS TAMPA DUBAI CHANGSHA FT LAUDERDALE MEDINA BAHRAIN DELHI KUNMING FUZHOU MONTERREY RIYADH ABU DHABI MIAMI DOHA KARACHI DHAKA SHENZHEN XIAMEN LA PAZ CULIACAN MUSCAT HONOLULU JEDDAH AL AIN KOLKATA GUANGZHOU KAUAI SAN JOSE DEL CABO CANCUN MANDALAY HONG KONG GUADALAJARA AHMEDABAD MAUI PUERTO VALLARTA CHIANG MAI HAIKOU COZUMEL MUMBAI HANOI KONA VISAKHAPATNAM SANYA MEXICO CITY KHARTOUM HYDERABAD BANGKOK DA NANG HUATULCO BANGALORE YANGON MANILA SIEM REAP COIMBATORE CHENNAI NHA TRANG KOCHI PHNOM PENH KOH SAMUI HO CHI MINH CITY THIRUVANANTHAPURAM PHUKET KOTA KINABALU PENANG MALÉ COLOMBO LAGOS MEDAN BANDAR SERI BEGAWAN KUALA LUMPUR MANADO SINGAPORE KAVIENG BALIKPAPAN NAIROBI MAHE LONDOLOVIT (SEYCHELLES) KOKOPO/RABAUL SEMARANG MAKASSAR MT. HAGEN GOROKA JAKARTA SURABAYA LAE POPONDETTA BANDUNG LOMBOK YOGYAKARTA TUFI DENPASAR (BALI) PORT MORESBY (PAPUA NEW GUINEA) HONIARA (SOLOMON ISLANDS) COCOS (KEELING) ISLANDS CHRISTMAS ISLAND DARWIN APIA (SAMOA) PORT VILA (VANUATU) CAIRNS NADI (FIJI) PORT HEDLAND RAROTONGA (COOK ISLANDS) NUKU’ALOFA (TONGA) SUNSHINE COAST JOHANNESBURG BRISBANE GOLD COAST PERTH NEWCASTLE SYDNEY CAPE TOWN ADELAIDE CANBERRA AUCKLAND MELBOURNE WELLINGTON CHRISTCHURCH QUEENSTOWN DUNEDIN CONTENTS 2 Snapshot 43 Financial Report 4 Chairman’s Report 102 Independent auditors’ report 6 CEO’s Report 109 Shareholder information 8 Directors’ report 113 Corporate directory Virgin Australia Group | Annual Report 2018 1 PASSENGERS CARRIED (MILLIONS) 24.9 23.7 24.2 22.3 19.4 20.0 18.6 19.3 2011 2012 2013 2014 2015 2016 2017 2018 AVAILABLE SEAT KILOMETRES (BILLIONS) 48.6 47.0 46.8 46.0 42.2 41.8 39.8 37.1 2011 2012 2013 2014 2015 2016 2017 2018 2 Virgin Australia Group | Annual Report 2018 TOTAL REVENUE AND INCOME ($MILLIONS) 2014 2016 2018 2015 2013 2012 2017 2011 5 3 , , 2 4 3 7 5 , 1 2 5 9 , 4 2 1 0 , 0 0 4 4 ,0 4 , 2 2 ,7 3 0 7 1 4 0 9 7 OPERATING FLEET EMPLOYEES 133* 10,151 DESTINATIONS VELOCITY MEMBERS In our virtual global network 9.1 million 464 AWARDS We were recognised for a number of industry awards during the year, including: Best Domestic Airline – Australian Federation of Best Business Class – AirlineRatings Airline Travel Agents National Travel Industry Awards. Excellence Awards / Ranked number 4 in the Global Top 10 Airlines. Five Star Rating – Awarded by the Airline Passenger Experience Association. Program of the Year / Best Elite Program / Best Customer Service / Best Redemption Ability Inflight Airline of the Year – Inflight Asia-Pacific – Middle East and Asia/Oceania region airline Awards. category – Freddie Awards. *Operating fleet excludes aircraft that have been removed from operational service. Statistics have been rounded. Passengers Carried and Kilometres Flown include 100% of Tigerair Australia statistics from 1 November 2014. Virgin Australia Group | Annual Report 2018 3 CHAIRMAN’S REPORT During the 2018 financial year, the Virgin Australia Group significantly improved the performance of its underlying business and continued to strengthen its financial foundation. As a result, the Group is well placed to deliver sustainable profitability in the future. 4 Virgin Australia Group | Annual Report 2018 CHAIRMAN’S REPORT Over the year, the Group grew revenue total issued share capital being bought John Borghetti to step down from his role. and increased earnings from its day- back and cancelled. John has served as CEO for more than to-day operations to record its highest eight years, and in that time he has led Underlying Profit Before Tax1 in a decade. I would like to thank all of our shareholders, one of Australia’s most significant business The Virgin Australia Domestic business, including our major shareholders Etihad transformations. John will remain focused which sits at the centre of the Group’s Airways, HNA Group, Nanshan Group, on leading the Virgin Australia Group operations, recorded its highest underlying Singapore Airlines and the Virgin Group for while the Board conducts a search for his profit result and margin in six years. This their support and their valuable input as successor. I would like to thank John for outstanding performance was driven by strategic airline investors. all of his work and for providing the Board the Group’s excellent customer offering, Each of our Board members bring with ample time to conduct a thorough growth in the corporate and leisure markets important insights and experiences to recruitment process. and disciplined management of fleet and our board table. I thank all of my fellow capacity. I would also like to thank the people of the directors for their work and commitment Virgin Australia Group for their very hard Following the capital structure review in to the success of the Group. work over the past year. I am grateful for 2016, the Board and executive management We can all be proud of the Virgin Australia their dedication to providing exceptional team have been firmly focused on Group’s standing as one of the best airlines service to our customers. reinforcing the Group’s financial foundation in the world, as demonstrated by the in order to support future profitability. The Board and management are confident following industry awards received by the that the Virgin Australia Group is on a This focus has resulted in considerable Group during the 2018 financial year: improvements in the business’s financial positive trajectory toward sustainable metrics and cash flow performance. In the • ‘Best Domestic Airline’ at the Australian profitability. The business is well-equipped 2018 financial year, the Group generated Federation of Travel Agents National Travel for the future with an excellent product, an the highest ever amount of net cash from Industry Awards; optimised network and fleet and a strong operating activities and its best Financial
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