Virgin Australia first-half profits drop, defers Boeing deliveries

Virgin Australia Holding Friday posted a 48% fall in H1 underlying pre-tax earnings and deferred the delivery of new Boeing737MAX aircraft after airfares tumbled due to tough conditions in the domestic aviation market. Australia's second-biggest airline reported an underlying profit before tax of A$42.3m (US$32.55m) for the six months ended Dec. 31, compared with A$81.5m in the year-earlier period. On a statutory basis, including restructuring charges associated with a cost-savings program, it reported a loss of A$A21.5m, compared with a A$62.5m profit the year before. Australia's domestic aviation market has been subdued for the past year due to weak demand for flying from corporate customers, including mining companies, as well as government travelers. Virgin said domestic yields, a proxy for average fare prices, had fallen by 5.6% in H1 of the financial year. “Going forward, the group will stay focused on strengthening our financial foundation by further optimizing the balance sheet and building a lower cost base," Virgin CEO John Borghetti said. The airline said it had deferred the first Boeing 737MAX aircraft to be delivered until late 2019, rather than 2018 as previously flagged, in a move that would postpone A$350m of capital spending beyond the financial year ended June 30, 2019.<br/>