SYDNEY - Virgin Australia on Friday posted an annual net loss of Aus$355.6 million (US$332 million) as intense competition led by Qantas, weak consumer sentiment and high taxes hurt its bottom line.
A Virgin Australia plane taking off at Sydney Airport, August 28, 2014
The country's second largest carrier also announced the sale of a 35 percent stake in its frequent flyer programme to private equity firm Affinity Equity Partners, boosting its cash balance by Aus$336 million.
The result was more than triple the Aus$98.1 million loss it reported in the 12 months to June 30 the previous year, and follows huge annual losses by Qantas on Thursday.
Virgin's underlying loss -- its preferred measure of financial performance, which excludes one-off costs and write downs -- was Aus$211.7 million.
The carrier, which is majority owned by Singapore Airlines, Air New Zealand and Etihad, blamed excess market capacity, weak consumer sentiment, economic uncertainty and Aus$51.6 million in carbon tax costs for the poor numbers.
"The 2014 financial year has seen one of the most difficult operating environments in the history of Australian aviation," said chief executive John Borghetti.
"While the Virgin Australia Group performed well in attracting high yielding passengers and containing cost growth over the full year, underlying revenue performance was impacted by the challenging operations conditions."
The tough conditions faced by airlines in Australia were made starkly apparent by flag carrier Qantas, which reported record annual net losses of Aus$2.84 billion.
It blamed restructuring and redundancy payouts and a write down in the value of its ageing international fleet for the huge losses, although its domestic arm also struggled.
Like Qantas chief Alan Joyce, Borghetti insisted better days were ahead.
"While the 2014 financial year has been an extremely tough year for the industry, I am confident that the Virgin Australia Group is in a strong strategic position going forward," he said.
"This next period for us is about maximising the group's potential, by extracting value from the business and generating sustainable profitability."
Virgin's balance sheet was boosted by selling a minority stake in its Velocity frequent flyer programme -- which has 4.5 million members -- to one of Asia-Pacific's largest investment firms, fund manager Affinity Equity Partners.
"Affinity brings a wealth of experience in driving rapid and sustainable growth across a diverse range of businesses and we look forward to working with them to enhance value," Borghetti said.