The Motley Fool

Trading update: Virgin Australia to post big loss in FY 2019

The Virgin Australia Holdings Ltd (ASX: VAH) share price will be on watch on Friday after the airline operator released a trading update.

What was in the update?

This morning Virgin Australia provided its guidance for FY 2019 based on current economic conditions, capacity and forward booking trends.

According to the release, the airline expects FY 2019 underlying earnings to be down by at least $100 million on last year’s results.

Given that Virgin Australia posted an underlying profit of $64.4 million in FY 2018, this would indicate that it expects to post an underlying loss of at least $35.6 million this year.

Management advised that this poor result reflects the uncertainty of revenue trading conditions in the domestic market and annual fuel and foreign exchange headwinds in excess of $160 million.

It said: “Demand has weakened in both the corporate and leisure sectors, driven by lower levels of consumer and business confidence, consumer spending and the impact of the Federal Election. The corporate sector has been affected by the timing of the Easter holiday period and has been slow to recover due to the impact of the Election.”

The company is attempting to combat this and has initiated a network review and made some immediate adjustments to capacity and the frequency of services to better align with demand conditions.

The company’s CEO and managing director, Paul Scurrah, appeared to be disappointed with the performance of the business but was optimistic on its long term prospects.

He said: “While we have continued to grow revenue, this announcement shows that our business needs to become more resilient to challenges such as weaker demand, high fuel prices and the foreign exchange environment.”

Before adding: “There is a lot of work being done to develop our new strategy that will help position the Group for long-term success. In the meantime, we are focused on short-term improvements including capacity and network reductions to ensure we are better meeting current demand from the corporate and leisure sectors.”

This is quite the contrast to Qantas Airways Limited (ASX: QAN) which looks set to deliver another bumper profit result in August.

Instead of Virgin Australia, investors might want to check out this exciting company which has been tipped as a market beater.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here's the best part: we think there's one ASX stock that's uniquely positioned to profit immensely from this explosive new industry... taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

NEW. Five Cheap and Good Stocks to Buy in 2019…

Our Motley Fool experts have just released a brand new FREE report, detailing 5 dirt cheap shares that you can buy today.

One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…

Another is a diversified conglomerate trading near a 52-week low all while offering a 2.8% fully franked yield…

Plus 3 more cheap bets that could position you to profit over the next 12 months!

See for yourself now. Simply click the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.

CLICK HERE FOR YOUR FREE REPORT!