Qantas, Virgin play below the line
The dividends, exclusions and bonuses are flying at Qantas and Virgin.
Public company life looks pretty easy the second time around for Virgin Australia and its soon-departing owners at Bain Capital. The airline’s liabilities still exceed its assets due to its near death experience during the COVID-19 pandemic, but it is about to pay $57 million in dividends for its first full year back on the bourse.
Virgin will pay a dividend because it beat market expectations after increasing underlying earnings before interest and tax by more than 13 per cent to $753 million. This is largely because its fuel hedging insulated the airline from most of the refining margin pain suffered by Qantas (and other airlines globally) after the Iran war sent the cost of jet fuel soaring.
As we've previously reported, there are few companies to have done better out of the COVID-19 pandemic than Bain, which acquired the airline out of administration for a song in 2020 and has already pulled out $2.5 billion in the six years since. Bain still owns 39 per cent of Virgin and looks set to commence its long awaited sell-down of that remaining stake any day now. A further $23 million will go to Bain in dividends on September 15, should it still own those shares. [[The dividend it will receive is less than the $36 million in management and consulting fees Bain paid itself last year ahead of the IPO.]]
Amelia McGuire
This year's carried-over pandemic perk for Bain came in the form of $75 million of unredeemed Virgin flight credits owed to passengers whose plans were dashed when the world's airspace closed in March 2020.[[Virgin's total COVID-19 flight credit balance exceeded $1 billion for grounded flights between April 2020 and July 2022 which means the vast majority of credits were redeemed.]]
All up, Virgin unveiled $603 million in statutory profit before tax. This means one in every eight dollars came from unredeemed credits.
