Virgin Australia Profit Climbs as Velocity Loyalty Boom and Qatar Partnership Strengthen Airline Comeback

Key Highlights:

• Underlying profit rises 20.7% to $279 million despite statutory dip
• Velocity loyalty division delivers strong growth with 700,000 new members
• Revenue climbs to $3.3 billion as travel demand remains resilient
• Virgin shifts to owning new Boeing aircraft to improve efficiency
• Qatar Airways partnership strengthens global connectivity strategy
  
   

After years of turbulence, Virgin Australia Holdings Ltd is showing signs of steady altitude again. The airline’s latest half year results reveal a business that is quietly strengthening its foundations, with loyalty programs, strategic partnerships, and operational efficiency driving a renewed phase of growth.

Virgin reported underlying net profit of $279 million for HY26, a 20.7 percent increase from a year earlier, while revenue climbed 9.3 percent to more than $3.3 billion, according to company results released on Friday. 

The figures suggest Australians are still willing to spend on travel, even as household budgets remain under pressure from inflation and higher interest rates.

Shares in Virgin were trading at $3.14 in early afternoon trading, down slightly on the day but still reflecting a stable recovery story following the airline’s post pandemic restructuring.

Source: MarketIndex 

The accounting dip that masks a stronger business

At first glance, the headline statutory profit appeared weaker, falling nearly 28 percent. But this decline was largely due to accounting adjustments.

Last year’s result included more than $450 million in one off tax credits, which inflated statutory profit. Strip those out, and the underlying picture is far more positive.

Virgin’s underlying EBIT rose 11.7 percent to $490 million, highlighting improved operational performance across its core airline and loyalty businesses.

This distinction matters. Underlying profit reflects how the airline is performing day to day, without the distortions caused by tax or accounting adjustments.

Velocity loyalty becomes the profit engine

While airlines traditionally earn money from tickets, Virgin’s most valuable asset is increasingly its loyalty program.

The Velocity Frequent Flyer division reported EBIT of $74 million, up 14.8 percent, and added 700,000 new members in just six months. The division’s profit margin reached 30.7 percent, more than double the airline’s core flying operations.

This reflects a broader global trend. Airlines including Qantas and Delta have transformed loyalty programs into high margin businesses, generating income through partnerships with banks, retailers, and credit card providers.

Velocity is now central to Virgin’s long term strategy, acting as both a customer retention tool and a standalone profit generator.

Strategic partnership with Qatar Airways strengthens reach

Virgin is also expanding its global footprint through partnerships, most notably its alliance with Qatar Airways.

The agreement strengthens Virgin’s ability to connect Australian travellers to Europe, the Middle East, and beyond, without having to operate its own long haul fleet.

This partnership allows Virgin to compete more effectively with its larger rival, Qantas Airways Ltd, which has historically dominated international routes.

Industry analysts note that global partnerships have become essential for airlines seeking to expand without taking on excessive financial risk.

Fleet overhaul signals long term confidence

Another major shift is happening behind the scenes. Virgin is moving away from leasing aircraft and toward owning more of its fleet.

The airline plans to purchase nine Boeing 737 8 Max aircraft, funded from its strong cash position of approximately $1.1 billion.

Owning aircraft outright reduces long term leasing costs and improves operational flexibility. The new aircraft are also more fuel efficient, helping offset rising fuel prices and maintenance expenses.

Virgin says the fleet renewal program is expected to deliver more than $200 million in transformation benefits, improving efficiency across its operations.

Travel demand remains resilient despite economic pressure

Virgin’s rising revenue suggests that travel demand remains robust, even as consumers face higher living costs.

This trend mirrors broader global patterns. According to airline industry data, passenger demand has rebounded strongly following pandemic disruptions, with leisure travel leading the recovery.

Australians appear to be prioritizing travel experiences, even as spending slows in other areas such as retail and discretionary goods.

The broader aviation context: a two airline battle

Virgin’s improving performance comes amid increased scrutiny of Australia’s aviation sector.

Qantas has faced operational and reputational challenges in recent months, creating an opportunity for Virgin to regain market share.

While Qantas remains the dominant carrier, Virgin’s loyalty growth, partnerships, and cost discipline are helping narrow the competitive gap.

Virgin’s strategy is different from its pre pandemic model. Rather than chasing aggressive expansion, the airline is focusing on profitability, efficiency, and customer retention.

The bottom line

Virgin Australia’s latest results show a business that has regained stability and is building toward long term strength.

Underlying profit is rising, loyalty programs are expanding, and partnerships are extending its global reach.

The airline’s recovery highlights how Virgin has evolved from survival mode into a more disciplined and sustainable operation.

After years of uncertainty, Virgin is no longer just flying again. It is rebuilding with purpose.

Source: Virgin Australia HY26 financial results, ASX market data