Updated February 27, 2026 — 11:45am, first published February 27, 2026 — 9:33am
Virgin Australia has reported a significant increase in half-year earnings, buoyed by robust revenue growth and heightened demand in the leisure travel sector. This financial upswing is accompanied by the announcement of a two-year plan to enhance its loyalty program, Velocity, marking a strategic focus on customer engagement and retention.
In the six months leading up to December, Virgin’s pre-tax earnings surged by 11.7 percent, reaching $490 million. According to Virgin’s CEO, Dave Emerson, “Passenger demand remains strong, with consumers continuing to prioritize travel and connectivity, supporting the airline’s segment.” The airline attributes its first-half success to $200 million in gross benefits derived from its ongoing transformation program, aimed at diversifying product offerings and reducing costs.
Transformation and Cost Management
The transformation program has enabled Virgin to achieve savings on fuel costs, which, along with productivity gains, have helped offset inflationary pressures. This has resulted in an expansion of the underlying pre-tax margin by 40 basis points to 14.8 percent.
Despite these gains, Virgin acknowledges the persistence of cost pressures across the industry. Costs are reportedly increasing “above inflation in several areas,” including supply chain expenses, airport charges, and aircraft maintenance. Emerson highlighted the rising airport landing fees as a significant concern, stating, “They are now our second-largest cost item, and they’re projected to grow in multiples of inflation. We really need to make sure that travel remains affordable.”
Velocity Loyalty Program Enhancements
Following a recent announcement by Qantas regarding changes to its loyalty program, Virgin has also signaled a renewed focus on its own Velocity program. Emerson described Velocity as a “growth engine,” with revenue from the program increasing by 18.8 percent in the first half, resulting in a pre-tax profit of $74 million, a 14.8 percent increase from the previous year.
Looking ahead, Emerson hinted at a series of initiatives set to roll out over the next 24 months, although he refrained from providing specific details due to the “very competitive market” with rivals like Qantas. One of the immediate changes includes a status credit promotion, offering members 125 bonus status credits on past and future bookings. Additionally, Andrew Cleary will assume leadership of the program, succeeding Nick Rohrlach.
Future Outlook and Technological Integration
CFO Race Strauss expressed optimism about Virgin’s financial trajectory, projecting continued growth in both revenue and underlying earnings for fiscal 2026. This optimism is underpinned by strong travel demand, the impact of the transformation program, and sustained growth in Velocity.
Emerson also noted the potential of new technologies, such as artificial intelligence, to further enhance Virgin’s operations. “The flipside is that new technology changes that equation, and so when completely new tools like AI come in, they can unleash a new wave of opportunity in transformation that otherwise would not have been there,” he said. Virgin is already utilizing AI to support its call center and other areas, although the full impact remains to be seen.
Financial Adjustments and Tax Implications
Since emerging from administration, Virgin has utilized past tax losses and is now in a “tax paying position.” This shift has led to a 27.9 percent decline in net profit after tax to $341 million for the first half of 2025. Earnings per share also fell by 33.5 percent to 43¢, reflecting changes in underlying and statutory net profit after tax, as well as the dilutionary impact of share options and rights associated with the initial public offering.
As Virgin navigates these financial adjustments, the airline remains committed to maintaining its competitive edge in the aviation industry, balancing cost management with strategic investments in customer loyalty and technological advancements.
