Financial results from the New Zealand end of Virgin Australia's trans-Tasman operations are no longer being reported separately although its annual group accounts show revenue from New Zealand falling markedly in the 2016 financial year.
During the 2016 financial year, Virgin Australia Airlines (NZ) transferred all its assets, liabilities, rights and obligations to its parent, Australia's second-largest airline.
A remaining $2.15 million liability from the New Zealand arm was forgiven under the agreement. Financial accounts for VAA (NZ) were still prepared on a going concern basis although the only separately reported numbers this year were auditor costs and share capital and reserves. Last year the New Zealand subsidiary reported a $98,000 net loss on revenue of $194m.
VAA (NZ)'s operations are now included under the group's International division in its consolidated accounts. In the group's full-year accounts to the end of June 2016, passenger and other service revenue from inbound and outbound services between Australia and New Zealand fell to A$154.7m from A$218.2m the prior year. That's shifted New Zealand from the second highest revenue earner by market, behind Australia, to last place, although a number of countries are lumped under 'other'.
An airline spokesman said that figure only recorded revenue that could be directly tracked from New Zealand and didn't reflect trans-Tasman revenue as it omits bookings to New Zealand from Australia. It also said the figure wasn't 100 percent reliable.
Full-year accounts for Virgin Australia (NZ) Employment and Crewing, which provides crew for Virgin's transTasman flights, show revenue of just under $50m, on par with the previous year. Net income was $10,000 attributable to its parent, while accumulated losses were $40,000.
Virgin Australia last week reported an underlying loss before tax of A$34.6m for the first quarter of the 2017 financial year, blaming subdued industry trading conditions, particularly in the domestic market. The result includes the impact of restructuring charges.
Domestic revenue fell 3.9 per cent to A$4.28 billion while its international division, which now includes New Zealand, increased by 8.6 per cent to A$706m. Load factor was unchanged at 84.8 per cent.
Air New Zealand divested its stake in Virgin Australia during the year, mainly to Chinese company Nanshan Group, while continuing its long-standing codeshare alliance with the Australian airline on the trans-Tasman network. The A$67.5m sale in October of its remaining 2.5 per cent stake, which had been diluted from 6 per cent due to Virgin's private placement with HNA Innovation in June, will show up as a gain on sale in the New Zealand airline's 2017 results. That will partly offset the $86m loss on the divestment recorded in the 2016 results.
Air New Zealand remains the largest player in the trans-Tasman market, though a growing number of carriers and increased capacity has whittled its market share to around 35 per cent, despite passenger growth, and competition has lowered air fares.
Air NZ's accounts show passengers carried on the Tasman and Pacific Islands routes gained 3.15 per cent during the June 2016 financial year while passenger revenue per available seat kilometres fell 1.1 per cent to 9.9 cents. An analysis of revenue by geographic region at point of sale showed Australia and the Pacific Islands at $619m, down $20m on the prior year. It said it expected competitive pressures on the routes to continue in 2017.