Virgin Australia Holds FY26 Guidance Despite Rising Fuel Costs
Virgin Australia (ASX: VGN) has maintained its FY26 earnings outlook despite significant volatility in jet fuel prices, supported by strong demand and strategic cost management. Fuel expenses rose sharply, with first-half costs reaching AU$554.7 million, accounting for 21% of total operating expenses. Prices have more than doubled since February, leading to an expected AU$30–40 million increase in second-half fuel costs.
The airline has mitigated this impact through hedging, covering 92% of Brent crude and 71% of refining margins for the remainder of FY26. Earnings before interest and tax, along with margins, are still expected to surpass the prior corresponding period. The company maintains a healthy financial position, supported by low leverage of 0.8x and strong liquidity of approximately AU$1.5 billion.
Operationally, unit revenue is anticipated to increase by approximately 5% in the second half, with a stronger rise of around 6% expected in the final quarter. Domestic capacity is projected to rise 1% overall, despite a 1% decline in the fourth quarter, reflecting disciplined capacity management.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au
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Virgin Australia Holds FY26 Guidance Despite Rising Fuel Costs
Virgin Australia (ASX: VGN) has maintained its FY26 earnings outlook despite significant volatility in jet fuel prices, supported by strong demand and strategic cost management. Fuel expenses rose sharply, with first-half costs reaching AU$554.7 million, accounting for 21% of total operating expenses. Prices have more than doubled since February, leading to an expected AU$30–40 million increase in second-half fuel costs.
The airline has mitigated this impact through hedging, covering 92% of Brent crude and 71% of refining margins for the remainder of FY26. Earnings before interest and tax, along with margins, are still expected to surpass the prior corresponding period. The company maintains a healthy financial position, supported by low leverage of 0.8x and strong liquidity of approximately AU$1.5 billion.
Operationally, unit revenue is anticipated to increase by approximately 5% in the second half, with a stronger rise of around 6% expected in the final quarter. Domestic capacity is projected to rise 1% overall, despite a 1% decline in the fourth quarter, reflecting disciplined capacity management.
Customer Notice:
Nextgen Global Services Pty Ltd trading as Kapitales Research (ABN 89 652 632 561) is a Corporate Authorised Representative (CAR No. 1293674) of Enva Australia Pty Ltd (AFSL 424494). The information contained in this website is general information only. Any advice is general advice only. No consideration has been given or will be given to the individual investment objectives, financial situation or needs of any particular person. The decision to invest or trade and the method selected is a personal decision and involves an inherent level of risk, and you must undertake your own investigations and obtain your own advice regarding the suitability of this product for your circumstances. Please be aware that all trading activity is subject to both profit & loss and may not be suitable for you. The past performance of this product is not and should not be taken as an indication of future performance.
Kapitales Research, Level 13, Suite 1A, 465 Victoria Ave, Chatswood, NSW 2067, Australia | 1800 005 780 | info@kapitales.com.au