‘Seat densification’: Virgin’s discipline pays off as full-year earnings climb

Virgin Australia chief executive Dave Emerson says the airline plans to put more seats on some of its planes, including adding an extra row in some cases, as part of a push to increase efficiency and boost revenue.

In its first set of numbers since its sharemarket listing, Virgin on Friday posted a 28 per cent jump in underlying earnings before interest and tax in fiscal 2025, from $519.4 million in the previous year to $664.4 million.

Before rejoining the ASX in June, the company began a “transformation” program aimed at lifting revenue and productivity, including through seat “densification”. Airlines can choose how to configure the seating on planes based on cost, space and comfort levels.

Emerson said adding more seats to the aircraft “really benefits the customer ... Sometimes today we show up and the plane has a few more or few fewer seats than we had planned, and that’s not great for the customer experience. So we’re setting it up now so each plane [has] exactly the same configuration, and for some of the planes that needs an extra row of seats, but not all of them.”

Chief financial officer Race Strauss said:“We’ve still got a lot of the fleet density opportunities, putting the additional aircraft in the fleet. We’re only a little more halfway on that.”

Additionally, Virgin Australia Regional Airlines is being simplified, and more technology dividends are coming.

“There’s a long pipeline still to come,” Stauss said.

Virgin said the results were “underpinned by continued progress in the group’s transformation program”, which accounted for $450 million in gross benefits during the year, up from $270 million the previous year.

Emerson said: “Virgin Australia achieved strong underlying earnings growth, relaunched long-haul services, advanced our transformation program, and lifted operational performance – all while delivering exceptional experiences for our guests.

“We strengthened our partnership with Qatar Airways Group and returned to public ownership through a successful IPO, a strong endorsement of our clear strategy and market position.”

Strauss said: “Importantly, all key financial metrics included in the prospectus were met or exceeded.”

The company’s transformation program aims to enhance revenue through more offerings, cut costs through improved productivity, and drive deeper loyalty to Virgin’s Velocity program.

The cost of the IPO and Qatar Airways “wet lease” transaction was $115.9 million. The deal gives Virgin access to Qatar’s international long-haul network, without the cost of maintaining the fleet.

The company’s transformation program is expected to generate $400 million in benefits in 2026 and more for the next few years “and beyond”.

“We’re in a high inflationary environment in aviation, and so we need to be not just offsetting [the inflation] but getting beyond it,” Emerson said.

Velocity contributed $450 million to Virgin, up from $409 million, and added 900,000 members.

“The Qatar deal has really helped our Velocity program and created a very positive dynamic for customers,” said Emerson, who noted that on a profit and loss basis “it hasn’t really affected us positively or negatively”.

Atlas Funds chief investment officer Hugh Dive said Virgin’s results had to be read in parallel with those of Qantas to get a reading of where the company stood.

While Virgin had smaller capital expenditure than Qantas, which is refreshing its fleet, overall the airlines were tracking in a similar direction.

Virgin’s load factor – a measure of the used seat capacity, or the fullness of a flight – is at 84.9 per cent compared with Qantas domestic at 78.1 per cent.

“Virgin’s load factor is a lot higher than Qantas domestic – but both are pretty good,” said Dive.

Jetstar domestic is at 89.5, which helps explain its contribution to Qantas.

Revenue rose to $5.8 billion in 2025 from $5.63 billion in 2024, growth of 3.1 per cent.

Virgin made a successful return to the sharemarket in June, valued at $2.3 billion, after selling $685 million worth of stock.

Virgin was delisted from the ASX in 2020 amid mounting debts and losses. Having entered administration, it was bought by US-based Bain Capital, the private equity firm Emerson worked for before joining Virgin’s management in 2021.

Emerson said Virgin continued “to make great progress” on having small caged dogs and cats in cabins.

“I think that you should see us doing actual live trials quite soon,” he said.

Asked about passengers with pet allergies, Emerson said: “We’re confident that the process and procedures that we put in place will work for all of our customers.”

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