Q4 2026 Virgin Australia Holdings Ltd Earnings Call

August 28, 2026

Speaker #1: Good morning, everyone, and thank you for joining us for Virgin Australia's FY26 results presentation. Joining me today is Ray Strauss, our Chief Financial Officer.

Dave Emerson: Good morning, everyone, and thank you for joining us for Virgin Australia's FY2026 results presentation. Joining me today is Race Strauss, our Chief Financial Officer. We also have other members of the executive leadership team in the room to help answer your questions at the end of the presentation. I would like to begin by acknowledging the traditional owners of the land on which we live, work, and fly, and pay my respects to elders, past and present. I also extend that acknowledgment and respect to any Aboriginal or Torres Strait Islanders peoples joining today's call. Turning to slide 2 and an overview of today's results. FY2026 was another year of significant progress for Virgin Australia. We delivered earnings growth and margin expansion despite a challenging cost environment, while continuing to strengthen the operational and commercial foundations of the business.

Speaker #1: We also have other members of the executive leadership team in the room to help answer your questions at the end of the presentation. I'd like to begin by acknowledging the traditional owners of the land on which we live, work, and fly.

Speaker #1: And pay my respects to Elders past and present. I also extend that acknowledgment and respect to any Aboriginal or Torres Strait Islander peoples joining today's call.

Speaker #1: Turning to slide 2 and an overview of today's results. FY26 was another year of significant progress for Virgin Australia. We delivered earnings growth and margin expansion despite a challenging cost environment, while continuing to strengthen the operational and commercial foundations of the business.

Speaker #1: The result reflects resilient customer demand, disciplined capacity management, the continued delivery of our transformation program, and the benefits of decisions we have made over several years to simplify and strengthen the company.

Dave Emerson: The result reflects resilient customer demand, disciplined capacity management, the continued delivery of our transformation program, and the benefits of decisions we have made over several years to simplify and strengthen the company. It also reflects the commitment of more than 8,500 people. Their focus on safety, our guests, and on operational delivery is what turns strategy into results every day. Moving to slide 3. Excuse me. The three key messages I want you to take away today. First, our strategy is working. We delivered strong earnings growth and further margin expansion in a year characterized by above-inflation cost pressures and a challenging geopolitical environment. Second, the quality of our earnings continues to improve. We achieved stronger commercial and operational outcomes supported by transformation, disciplined capacity management, and improving customer metrics. And third, we are investing to strengthen Virgin Australia's long-term competitive position.

Speaker #1: It also reflects the commitment of more than 8,500 people. Their focus on safety, our guests, and on operational delivery is what turns strategy into results every day.

Speaker #1: Moving to slide 3. Excuse me. The three key messages I want you to take away today: First, our strategy is working. We delivered strong earnings growth and further margin expansion in a year characterized by above-inflation cost pressures and a challenging geopolitical environment.

Speaker #1: Second, the quality of our earnings continues to improve. We achieved stronger commercial and operational outcomes, supported by transformation discipline, capacity management, and improving customer metrics.

Speaker #1: And third, we’re investing to strengthen Virgin Australia’s long-term competitive position. That includes targeted investment in Velocity, our fleet, AI, and our people. Taken together, FY26 demonstrates that our strategy is delivering sustainable earnings growth. The disciplined application of our capital allocation framework has also enabled the Board to declare a fully franked dividend of 7.6 cents per share, our inaugural dividend since we re-listed in 2025.

Dave Emerson: That includes target investment in Velocity, our fleet, AI, and our people. Taken together, FY2026 demonstrates that our strategy is delivering sustainable earnings growth. The disciplined application of our capital allocation framework has also enabled the board to declare a fully franked dividend of AUD 0.076 per share, our inaugural dividend since we relisted in 2025. Turning to slide 4. We continue to measure progress against the four pillars that underpin our ambition to be Australia's most loved airline by our people, our guests, and our owners. We are operating a focused business with a clear value carrier proposition, targeted customer segmentation, and exposure to the highly attractive Australian domestic aviation market. Velocity provides an additional source of earning stability and long-term growth. We are improving the experience our guests value. Strategic NPS increased again.

Speaker #1: Turning to slide 4. We continue to measure progress against the four pillars that underpin our ambition to be Australia’s most loved airline—by our people, our guests, and our owners.

Speaker #1: We're operating a focused business with a clear value carrier proposition, targeted customer segmentation, and exposure to the highly attractive Australian domestic aviation market. Velocity provides an additional source of earnings stability and long-term growth.

Speaker #1: We're improving the experience our guests value. Strategic NPS increased again. Our share of corporate and SME customers continues to grow, and our fleet is transitioning to newer and more efficient Boeing 737 MAX 8 and Embraer E190-E2 aircraft.

Dave Emerson: Our share of corporate and SME customers continued to grow, and our fleet is transitioning to newer and more efficient Boeing 737 MAX 8 and Embraer E190-E2 aircraft. Operationally, on-time performance improved to 77.1% and exceeded 80% in the June quarter. Our completion rate increased to 98.7%, the highest of the major airlines, and load factor was 84.9%. Financially, our fuel hedging program protected earnings. The balance sheet remained conservative with leverage below 1x underlying EBITDA, and the underlying EBIT margin increased by 60 basis points to 12%. These outcomes are connected. Simpler business and better operations improve the guest experience, which supports commercial performance and ultimately creates stronger financial returns. Moving to slide 5. This slide provides useful context for the progress we have made over the last three years.

Speaker #1: Operationally, on-time performance improved to 77.1% and exceeded 80% in the June quarter. Our completion rate increased to 98.7%, the highest of the major airlines, and load factor was 84.9%.

Speaker #1: Financially, our fuel hedging program protected earnings. The balance sheet remained conservative, with leverage below 1x underlying EBITDA, and the underlying EBIT margin increased by 60 basis points to 12%.

Speaker #1: These outcomes are connected. Simpler business and better operations improve the guest experience, which supports commercial performance and ultimately creates stronger financial returns. Moving to Slide 5.

Speaker #1: This slide provides useful context for the progress we've made over the last 3 years. Underlying EBIT has increased by more than 70%, and importantly, the underlying EBIT margin has increased by 320 basis points, which has been supported by the transformation program.

Dave Emerson: Underlying EBIT has increased more than 70%, and importantly, the underlying EBIT margin has increased by 320 basis points, which is supported by the transformation program. Importantly, this has not simply been a growth from adding capacity. It reflects better revenue outcomes, a more efficient operating model, the contribution from Velocity, and the cumulative benefits of transformation. This track record also gives us confidence that strategy can deliver growth while also improving the quality and resilience of earnings. Turning to slide 6 and the headline results. We are very pleased with the FY26 results, which finished ahead of market expectations despite fuel price increasing significantly in the H2. Underlying EBIT increased 13% to AUD 753 million, and as I have already noted, the underlying EBIT margin expanded 60 basis points to 12%.

Speaker #1: Importantly, this has not simply been growth from adding capacity. It reflects better revenue outcomes, a more efficient operating model, the contribution from velocity, and the cumulative benefits of transformation.

Speaker #1: This track record also gives us confidence the strategy can deliver growth, while also improving the quality and resilience of earnings. Turning to Slide 6 and the headline results.

Speaker #1: We're very pleased with the FY26 results, which finished ahead of market expectations despite fuel price increases significantly in the second half. Underlying EBIT increased 13% to $753 million, and as already noted, the underlying EBIT margin expanded 60 basis points to 12%.

Speaker #1: Statutory NPAT increased 5% to $501 million, which reflects a reduction in significant items and a lower benefit from deferred tax asset recognition than the prior year.

Dave Emerson: Statutory NPAT increased 5% to AUD 501 million, which reflects a reduction in significant items and a lower benefit from deferred tax asset recognition than the prior year. As I just stated, the board declared the first dividend since the IPO with 7.6 cents fully franked, which reflects both the strong result and the balance sheet. Key drivers of this performance were resilient customer demand, continued delivery from a transformation, an effective fuel hedging program, which together helped offset significant inflation in a number of cost categories. Turning to slide 7 and the airline segment. The airline segment delivered a strong result across our domestic, short-haul, international, and charter businesses. Underlying EBIT increased 15% to AUD 616 million, with an EBIT margin expanding 60 basis points to 10.2%. RASK increased 5.9% for the year, including 6.4% growth in the June quarter, consistent with our guidance from April.

Speaker #1: As I just stated, the board declared the first dividend since the IPO, with 7.6 cents fully franked. This reflects both the strong result and the balance sheet.

Speaker #1: Key drivers of this performance were resilient customer demand, continued delivery from transformation, and an effective fuel hedging program, which together helped offset significant inflation in a number of cost categories.

Speaker #1: Turning to slide 7 and the airline segment. The airline segment delivered a strong result across our domestic, short-haul international, and charter businesses. Underlying EBIT increased 15% to $616 million, with an EBIT margin expanding 60 basis points to 10.2%.

Speaker #1: We’re asking for an increased 5.9% for the year, including 6.4% growth in the June quarter, consistent with our guidance from April. This reflected strong demand, particularly from leisure customers, as well as continued delivery from commercial transformation initiatives.

Dave Emerson: This reflected strong demand, particularly from leisure customers, as well as continued delivery from commercial transformation initiatives. We also remain disciplined with capacity management as total ASKs increased 1.8%. CASK increased 5.1%, which reflects the significant inflation the industry continues to experience with offsets from transformation. Race will take you through more detail shortly. Importantly, our operational performance also improved for the year, and I have spoken about some of these key metrics already. This resulted in strategic NPS improving by 3 points to 30. These results demonstrate that we can grow earnings while continuing to improve the experience we provide our guests. Moving to slide 8. Velocity delivered another strong year and remains a key source of growth and earnings diversification for the group. Underlying EBIT increased 12% to AUD 143 million, and the margin expanded by 110 basis points to 29.4%.

Speaker #1: We also remained disciplined with capacity management, as total ASKs increased 5.1%, which reflects the significant inflation the industry continues to experience, with offsets from transformation.

Speaker #1: And RACE will take you through more detail shortly. Importantly, our operational performance also improved for the year, and I've spoken about some of these key metrics already.

Speaker #1: This resulted in strategic NPS improving by 3 points to 30. These results demonstrate that we can grow earnings while continuing to improve the experience we provide our guests.

Speaker #1: Moving to Slide 8: Velocity delivered another strong year and remains a key source of growth and earnings diversification for the Group. Underlying EBIT increased 12% to $143 million, and the margin expanded by 110 basis points to 29.4%.

Speaker #1: External billings also grew 12%, supported by continued strength across financial services and the broader partner portfolio. We added more than 800,000 new members during the year, and active members increased 9%. The coalition now includes more than 80 partners.

Dave Emerson: External billing also grew 12%, supported by continued strength across financial services and the broader partner portfolio. We added more than 800,000 new members during the year, and active members increased 9%, and the coalition includes more than 80 partners. Member engagement remained strong as we increased opportunities to earn points through new partnerships and the annualized impact of relaunched financial service products. Redemption was constrained during the year by reduced long-haul availability following the Middle Eastern conflict, which limited the reward seats members could access on partner services. We expect redemption to return to normal levels as capacity is restored. Looking ahead, the Reserve Bank's interchange fee changes are scheduled to commence on 1 October 2026. We plan to accelerate investment and growth opportunities to strengthen Velocity's future earnings trajectory, and I will return to that in the outlook statement. Turning to slide 9.

Speaker #1: Member engagement remained strong as we increased opportunities to earn points through new partnerships and the annualized impact of relaunched financial service products. Redemption was constrained during the year by reduced long-haul availability following the Middle Eastern conflict, which limited the reward seats members could access on partner services.

Speaker #1: We expect redemption to return to normal levels as capacity is restored. Looking ahead, the Reserve Bank's interchange fee changes are scheduled to commence on the 1st of October, 2026.

Speaker #1: We plan to accelerate investment in growth opportunities to strengthen Velocity's future earnings trajectory, and I'll return to that in the outlook statement. Turning to slide 9.

Speaker #1: Transformation remained central to our strategy and to our ability to grow margins in an inflationary environment. We delivered more than $450 million in gross transformation benefits in FY26.

Dave Emerson: Transformation remains central to our strategy and to our ability to grow margins in an inflationary environment. We delivered more than AUD 450 million in gross transformation benefits in FY26. That takes cumulative gross transformation benefits over the past three years to more than AUD 1.1 billion. The benefits are broad-based. Commercial initiatives are roughly 50% of the total and include revenue management optimization, increasing direct sales, and growing B2B share. Operational initiatives are roughly 40% and include seat densification, VARA fleet renewal, integrated planning, and fuel efficiency. The final 10% is Velocity. We are using data and personalization to deepen engagement and improve member value. Transformation is now embedded as continuous improvement rather than a finite program. This is important because the external cost environment remains challenging, and we need to keep improving the way we operate. We are targeting more than AUD 350 million in additional gross benefits in FY27.

Speaker #1: That takes cumulative gross transformation benefits over the past three years to more than $1.1 billion. The benefits are broad-based. Commercial initiatives are roughly 50% of the total, and include revenue management optimization, increasing direct sales, and growing B2B share.

Speaker #1: Operational initiatives are roughly 40% and include seat densification, VAR fleet renewal, integrated planning, and fuel efficiency. The final 10% is Velocity. We're using data and personalization to deepen engagement and improve member value.

Speaker #1: Transformation is now embedded as continuous improvement, rather than a finite program. This is important because the external cost environment remains challenging, and we need to keep improving the way we operate.

Speaker #1: We're targeting more than $350 million in additional gross benefits in FY27. Future benefits will come from both existing and new initiatives, increasingly enabled by our investment in AI.

Dave Emerson: Future benefits will come from both existing and new initiatives, increasingly enabled by our investment in AI. These benefits will partly offset further cost inflation and support ongoing margin improvement. I will now hand over to Race to take you through the financial result in more detail.

Speaker #1: These benefits will partly offset further cost inflation and support ongoing margin improvement. I'll now hand over to Race to take you through the financial results in more detail.

Speaker #2: Thanks, Dave. And good morning, everyone. These financial results reinforce the key message that the strategy is delivering. Both the airline and Velocity grew EBIT and improved margins.

Race Strauss: Thanks, Dave, and good morning, everyone. This financial result reinforces the key message that the strategy is delivering. Both the airline and Velocity grew EBIT and improved margins, while the group generated strong operating cash flow and retained a conservative balance sheet. This enabled balance sheet capacity to be deployed to the fleet renewal with the debt-funded purchase of four MAX 8 aircraft and the board to declare the first dividend since the IPO. Turning to slide 11. These results are presented on an underlying basis and exclude significant items which decreased substantially this year as we transition these costs above the line. It is also important to note that our underlying results do not include the benefit of expired COVID credits. At the group level, revenue increased 8% to AUD 6.3 billion, and underlying EBITDA increased 15% to AUD 1.24 billion.

Speaker #2: While the group generated strong operating cash flow and maintained a conservative balance sheet, this enabled balance sheet capacity to be deployed to the fleet renewal with the debt-funded purchase of four MAX 8 aircraft, and the Board to declare the first dividend since the IPO.

Speaker #2: Turning to slide 11. These results are presented on an underlying basis and exclude significant items, which decrease substantially this year as we transition these costs above the line.

Speaker #2: It's also important to note that our underlying result does not include the benefit of expired COVID credits. At the group level, revenue increased 8% to $6.3 billion, and underlying EBITDA increased 15% to $1.24 billion.

Speaker #2: Depreciation and amortization increased to $487 million, primarily reflecting the investment in newer, more fuel-efficient aircraft. That investment produces operational and fuel benefits, but of course also increases depreciation as the fleet is renewed.

Race Strauss: Depreciation and amortization increased to AUD 487 million, primarily reflecting the investment in newer, more fuel-efficient aircraft. That investment produces operational and fuel benefits, but of course also increases depreciation as the fleet is renewed. Underlying EBIT increased 13% to AUD 753 million, and the EBIT margin expanded by 60 basis points to 12%. Net finance costs increased modestly to AUD 174 million. Higher interest on leases associated with fleet renewal was partly offset by increased interest income. Income tax expense was AUD 175 million, reflecting a 30% effective tax rate and the full utilization of our remaining tax losses. This resulted in underlying NPAT of AUD 404 million, up 22%, and diluted underlying EPS of AUD 0.509, up 13%. Diluted EPS reflects all shares, including those still under escrow. Turning to slide 12 and the drivers of EBIT growth.

Speaker #2: Underlying EBIT increased 13% to $753 million, and the EBIT margin expanded by 60 basis points to 12%. Net finance costs increased modestly to $174 million. Higher interest on leases associated with fleet renewal was partly offset by increased interest income.

Speaker #2: Income tax expense was $175 million, reflecting a 30% effective tax rate and the full utilization of our remaining tax losses. This resulted in underlying NPAT of $404 million, up 22%.

Speaker #2: And diluted underlying EPS of 50.9 cents, up 13%. Diluted EPS reflects all shares, including those still under escrow. Turning to slide 12 and the drivers of EBIT growth.

Speaker #2: This bridge shows the growth in underlying EBIT through the lens of flying activity, unit revenues, and unit costs. We saw strong revenue growth through higher yields and RASC.

Race Strauss: This bridge shows the growth in underlying EBIT through the lens of flying activity, unit revenues, and unit costs. We saw strong revenue growth through higher yields and RASK, with additional costs due to the inflationary environment, particularly in airports and labor, which I will talk about shortly. Of note is fuel, which was broadly flat despite volatility in the oil price. Activity reflects additional flying with 1.8% ASK growth across the network and captures the incremental revenue and direct cost. RASK was the largest positive contributor, adding AUD 347 million, as RASK increased 5.9%. Non-fuel costs increased by AUD 309 million, and this increase illustrates why transformation remains essential. Around 40% of the AUD 450 million growth transformation benefits delivered during the year were operational initiatives, which helped offset industry-wide cost escalation and enabled margin expansion.

Speaker #2: With additional costs due to the inflationary environment, particularly in airports and labor—which I'll talk about shortly. Of note, fuel was broadly flat despite volatility in the oil price.

Speaker #2: Activity reflects additional flying, with 1.8% ASK growth across the network, and captures the incremental revenue and direct cost. RASC was the largest positive contributor, adding $347 million, as RASC increased 5.9%.

Speaker #2: Non-fuel costs increased by $309 million, and this increase illustrates why transformation remains essential. Around 40% of the $450 million gross transformation benefits delivered during the year were operational initiatives.

Speaker #2: Which helped offset industry-wide cost escalation and enabled margin expansion. These costs include the benefit from lower maintenance due to the transition to the newer fleet, and some lease extensions we undertook in the second half, which defer expenditure.

Race Strauss: These costs include the benefit from lower maintenance due to the transition to the newer fleet and some lease extensions we undertook in the H2, which defer expenditure. Maintenance unit rates are still higher due to the global supply chain pressures, as we noted in the H1. Velocity contributed a further AUD 16 million of EBIT growth. Moving to slide 13. Total underlying operating expenses increased 6.5%, which is consistent with the growth of the business. It includes the benefits of transformation, lower maintenance costs, and fuel costs being held flat. The outcome on fuel costs demonstrates the effectiveness of our hedging program, which protected the business from significant increases in oil and refining margin prices in the H2.

Speaker #2: Maintenance unit rates are still higher due to global supply chain pressures, as we noted in the first half. Velocity contributed a further $16 million of EBIT growth.

Speaker #2: Moving to slide 13. Total underlying operating expenses increased 6.5%, which is consistent with the growth of the business. This includes the benefits of transformation, lower maintenance costs, and fuel costs being held flat.

Speaker #2: The outcome on fuel costs demonstrates the effectiveness of our hedging program, which protected the business from significant increases in oil and refining margin prices in the second half.

Speaker #2: The all-in fuel price of $168 per barrel also includes the benefit from improved burn rates from newer aircraft, like the MAX 8, which is 20% more fuel efficient than the 737-800s.

Race Strauss: The all-in fuel price of AUD 168 per barrel also includes the benefit from improved burn rates from newer aircraft like the MAX 8, which is 20% more fuel efficient than the 737-800s. The increase in operating costs is also reflective of the inflationary cost environment we are operating in, particularly airport and labor costs. Airport costs increased 15%. As we have noted for some time, continued capital investment by monopoly-critical infrastructure is flowing through to higher airline costs, and we will remain focused on productivity and commercial discipline to mitigate this pressure. Labor costs increased 8%, which reflects transformation investment, growth in the business, and the inclusion of public company costs. Turning to slide 14 and cash flow. The business generated strong cash flow, with operating cash flow of AUD 1.3 billion being deployed towards our capital needs, including fleet renewal.

Speaker #2: The increase in operating costs also reflects the inflationary cost environment we are operating in, particularly for airport and labor costs. Airport costs increased by 15%.

Speaker #2: As we have noted for some time, continued capital investment by monopoly critical infrastructure is flowing through to higher airline costs, and we will remain focused on productivity and commercial discipline to mitigate this pressure.

Speaker #2: Labor costs increased 8%, which reflects transformation investment, growth in the business, and the inclusion of public company costs. Turning to Slide 14 and cash flow.

Speaker #2: The business generated strong cash flow, with operating cash flow of $1.3 billion being deployed towards our capital needs, including fleet renewal. Cash increased by $725 million, to over $1.8 billion.

Race Strauss: Cash increased by AUD 725 million to over AUD 1.8 billion, but that did include a precautionary drawdown of our corporate facility to provide additional liquidity during the year. Therefore, net debt was largely unchanged. CapEx was AUD 884 million, consistent with guidance and reflecting the step-up in fleet renewal this year, including our decision to debt fund the acquisition of four MAX 8 aircraft, with more coming in FY27. There were AUD 471 million of proceeds from asset sales, principally the sale and leaseback of six MAX aircraft. Financing cash flows included AUD 171 million of interest paid for both leases and bank debt, and AUD 254 million of lease principal payments. Moving to Slide 15. Our balance sheet remains conservative and provides flexibility to fund the next phase of investment.

Speaker #2: But that did include a precautionary drawdown of our corporate facility to provide additional liquidity during the year. Therefore, net debt was largely unchanged. Capex was $884 million, consistent with guidance and reflecting the step-up in fleet renewal this year.

Speaker #2: Including our decision to debt fund the acquisition of four MAX 8 aircraft, with more coming in FY27. There were $471 million of proceeds from asset sales, principally the sale and leaseback of six MAX aircraft.

Speaker #2: Financing cash flows included $171 million of interest paid for both leases and bank debt, and $254 million of lease principal payments. Moving to slide 15.

Speaker #2: Our balance sheet remains conservative and provides flexibility to fund the next phase of investment. Total debt increased to $3 billion, reflecting fleet investment and the precautionary drawdown of the revolving debt facility during the year.

Race Strauss: Total debt increased to AUD 3 billion, reflecting fleet investment and the precautionary drawdown of the revolving debt facility during the year to provide additional liquidity of around AUD 350 million. Interest-bearing liabilities include the debt finance purchase of four new aircraft, while aircraft lease liabilities increased following the delivery of 13 new leased aircraft. Cash equivalents and term deposits increased to AUD 1.8 billion, and unrestricted liquidity was approximately AUD 1.6 billion at year-end. As noted, net debt was broadly stable at AUD 1.2 billion, and leverage reduced to 0.9 times underlying EBITDA. That is below our target range and reflects strong cash generation and prudent application of our capital allocation framework, while giving us capacity to continue investing in fleet with more aircraft to be delivered in FY27. Turning to Slide 16. The transition to a younger and more efficient fleet remains on track.

Speaker #2: To provide additional liquidity of around $350 million. Interest-bearing liabilities include the debt-financed purchase of four new aircraft, while aircraft lease liabilities increased following the delivery of 13 new leased aircraft.

Speaker #2: Cash, cash equivalents, and term deposits increased to $1.8 billion, and unrestricted liquidity was approximately $1.6 billion at year-end. As noted, net debt was broadly stable at $1.2 billion, and leverage reduced to 0.9 times underlying EBITDA.

Speaker #2: That is below our target range and reflects strong cash generation and prudent application of our capital allocation framework, while giving us capacity to continue investing in fleet, with more aircraft to be delivered in FY27.

Speaker #2: Turning to slide 16, the transition to a younger and more efficient fleet remains on track. We took delivery of 17 new aircraft during FY26: 13 Boeing Max 8 aircraft and 4 Embraer E90 E2 aircraft.

Race Strauss: We took delivery of 17 new aircraft during FY26, 13 Boeing MAX 8 aircraft, and four Embraer E190-E2 aircraft. This enabled further simplification of the fleet, with the Fokker 100 sold and the remaining Airbus A320s no longer in operation. At 30 June, our narrow-body fleet comprised 108 aircraft, excluding three Airbus A320 aircraft held for return. The investment in new aircraft has resulted in the average fleet age reducing from 13.4 years to 11.5 years, and this is expected to further reduce as replacement continues. In February, we spoke about our intention to increase the owned aircraft mix, which improves financial returns over the life of the assets. Our fleet plan has this increasing to 39% by the end of FY27 with the debt-funded purchase of five MAX 8 aircraft and two Embraer E190-E2 aircraft and the conversion of some 737-800s from leased to owned.

Speaker #2: This enabled further simplification of the fleet, with the Fokker F100 sold and the remaining Airbus A320s no longer in operation. As of 30 June, our narrowbody fleet comprised 108 aircraft, excluding three Airbus A320 aircraft held for return.

Speaker #2: The investment in new aircraft has resulted in the average fleet age reducing from 13.4 years to 11.5 years, and this is expected to further reduce as replacement continues.

Speaker #2: In February, we spoke about our intention to increase the owned aircraft mix, which improves financial returns over the life of the assets. Our fleet plan has this increasing to 39% by the end of FY27.

Speaker #2: With the debt-funded purchase of five MAX 8 aircraft, and two Embraer E190-E2 aircraft, as well as the conversion of some 737-800s from leased to owned.

Speaker #2: By June 2027, MAX 8 aircraft are expected to account for approximately 25% of the 737 fleet, delivering ongoing fuel, maintenance, and sustainability benefits. Moving to slide 17.

Race Strauss: By June 2027, MAX 8 aircraft are expected to account for approximately 25% of the 737 fleet, delivering ongoing fuel, maintenance, and sustainability benefits. Moving to Slide 17. Our capital allocation framework is unchanged, and declaring a dividend demonstrates the framework in action. We first prioritize the balance sheet and business-as-usual investment that is required to operate safely and sustainably. Our long-term leverage target remains one to two times net debt to underlying EBITDA. We then invest excess cash in value-accretive opportunities where expected returns exceed our cost of capital through the cycle. That includes fleet, network, technology, and other growth initiatives. Where capital remains surplus to those requirements, it will be returned to shareholders through the most appropriate mechanism, including dividends or share buybacks.

Speaker #2: Our capital allocation framework is unchanged, and declaring a dividend demonstrates the framework in action. We first prioritized the balance sheet and business-as-usual investment.

Speaker #2: That is required to operate safely and sustainably. Our long-term leverage target remains 1 to 2 times net debt to underlying EBITDA. We then invest excess cash in value-accretive opportunities where expected returns exceed our cost of capital through the cycle.

Speaker #2: That includes fleet, network, technology, and other growth initiatives. Where capital remains surplus to those requirements, it will be returned to shareholders through the most appropriate mechanism, including dividends or share buybacks.

Speaker #2: Given the strength of the balance sheet, the cash generated during FY26, and our confidence in the outlook, the Board has declared a dividend of 7.6 cents per share, fully franked.

Race Strauss: Given the strength of the balance sheet, the cash generated during FY26, and our confidence in the outlook, the board has declared a dividend of AUD 0.076 per share, fully franked. This is an important milestone for Virgin Australia as a relisted company and reflects our commitment to disciplined capital management and shareholder returns. The dividend will also be shared across the workforce as many Virgin Australia team members hold shares from the IPO. Our capital allocation framework does not include a target payout ratio, and future dividends will be determined by following the same process every six months. I'll now hand back to Dave to discuss the outlook.

Speaker #2: This is an important milestone for Virgin Australia as a relisted company, and it reflects our commitment to disciplined capital management and shareholder returns. The dividend will also be shared across the workforce, as many Virgin Australia team members hold shares from the IPO.

Speaker #2: Our capital allocation framework does not include a target payout ratio, and future dividends will be determined by following the same process every six months.

Speaker #2: I'll now hand back to Dave to discuss the outlook.

Speaker #1: Thank you, Rees. Turning to the outlook for FY27, demand and forward bookings remain strong, with consumers continuing to prioritize travel. Against that backdrop, we remain disciplined on capacity.

Dave Emerson: Thank you, Race. Turning to the outlook for FY27. Demand in forward bookings remains strong with consumers continuing to prioritize travel. Against that backdrop, we remain disciplined on capacity. Domestic capacity is expected to reduce by around 3% in H1 FY27 compared with the prior corresponding period. For H1, we expect RASK growth of 6% to 8%, supported by strong demand transformation benefits and our disciplined approach to capacity. Importantly, our discipline focused on cost management continues, with transformation benefits and lower maintenance costs expected to partly offset continued cost pressure from airports and labor. This result in CASK ex fuel growth remaining below RASK in H1. Based on the current forward fuel curve, H1 fuel cost is expected to be approximately AUD 700 million, with hedging for the remainder of H1 being 96% for Brent and 20% for refining margins.

Speaker #1: Domestic capacity is expected to reduce by around 3% in the first half of FY27 compared with the prior corresponding period. For the first half, we expect RASK growth of 6% to 8%, supported by strong demand, transformation benefits, and our disciplined approach to capacity.

Speaker #1: Importantly, our discipline focused on cost management continues, with transformation benefits and lower maintenance costs expected to partly offset continued cost pressure from airports and labor.

Speaker #1: This results in CASC ex-fuel growth remaining below RASK in the first half. Based on the current forward fuel curve, first half fuel cost is expected to be approximately $700 million, with hedging for the remainder of the first half being 96% for Brent and 20% for refining margins.

Speaker #1: Taking those factors together, we currently expect first-half FY27 underlying EBIT to be broadly in line with first-half FY26. For Velocity, we have continued strong underlying momentum and active member growth and external billings.

Dave Emerson: Taking those factors together, we currently expect H1 FY27 underlying EBIT to be broadly in line with H1 FY26. For Velocity, we have continued strong underlying momentum in active member growth and external billings. This is expected to be offset by the one-time impact from the RBA interchange fee reset and a ramp-up of investment in a three-year Velocity transformation program. This is expected to result in Velocity's FY27 underlying EBIT being broadly in line with FY26. However, this investment is targeted to deliver low double-digit underlying EBIT growth for FY28 and FY29. We also will continue to invest in our long-term competitiveness of the business. FY27 CapEx is expected to be around AUD 900 million to AUD 1 billion, including the purchase of five Boeing 737-8 aircraft and two Embraer E190-E2 aircraft. Despite that investment, we expect leverage to remain at the low end of our target range.

Speaker #1: But this is expected to be offset by the one-time impact from the RBA interchange fee reset, and a ramp-up of investment in a three-year Velocity transformation program.

Speaker #1: This is expected to result in Velocity’s FY27 underlying EBIT being broadly in line with FY26. However, this investment is targeted to deliver low double-digit underlying EBIT growth for FY28 and FY29.

Speaker #1: We also will continue to invest in our long-term competitiveness as a business. FY27 capex is expected to be around $900 million to $1 billion, including the purchase of five Boeing 737-8 aircraft and two Embraer E190-E2 aircraft.

Speaker #1: Despite that investment, we expect leverage to remain at the low end of our target range. Significant items excluded from underlying EBIT are expected to reduce again to approximately $40 million, comprising around $20 million of transformation costs and around $20 million of IPO-related share-based payments.

Dave Emerson: Significant items excluded from underlying EBIT are expected to reduce again to approximately AUD 40 million, comprising around AUD 20 million of transformation costs and around AUD 20 million of IPO-related share-based payments, plus any foreign exchange movements on aircraft lease liabilities. The key message for FY27 is clear. Demand remains strong. We are maintaining capacity discipline. Transformation continues to support the spread between revenue and non-fuel costs. We expect H1 underlying EBIT to be broadly in line with last year, despite the changed fuel environment. Turning to slide 20, I will finish where I started. Virgin Australia has a clear plan to deliver continued earnings and margin growth over time. Our strategy is working, and we know where the next phase of growth will come from. We have multiple levers across the airline and Velocity to keep improving earnings, margins, and returns.

Speaker #1: Plus any foreign exchange movements on aircraft lease liabilities. So the key message for FY27 is clear: demand remains strong, we're maintaining capacity discipline, transformation continues to support the spread between revenue and non-fuel costs, and we expect first half underlying EBIT to be broadly in line with last year, despite the changed fuel environment.

Speaker #1: Turning to slide 20, I'll finish where I started. Virgin Australia has a clear plan to deliver continued earnings and margin growth over time.

Speaker #1: Our strategy is working, and we know where the next phase of growth will come from. We have multiple levers across the airline and Velocity to keep improving earnings, margins, and returns.

Speaker #1: Importantly, this is not dependent on one initiative or one part of the business. It's a broad-based plan underpinned by transformation, disciplined investment, and a continued focus on execution.

Dave Emerson: Importantly, this is not dependent on one initiative or one part of the business. It is a broad-based plan underpinned by transformation, disciplined investment, and a continued focus on execution. We believe that gives us a strong platform to deliver sustainable growth and create long-term value for shareholders. I want to thank every member of the Virgin Australia team for their contribution during the year. Their commitment to safety and service remains the foundation of our success. Thank you for your time this morning. Operator will now take questions.

Speaker #1: We believe that gives us a strong platform to deliver sustainable growth and create long-term value for shareholders. I want to thank every member of the Virgin Australia team for their contribution during the year.

Speaker #1: Their commitment to safety and service remains the foundation of our success. Thank you for your time this morning. Operator will now take questions.

Speaker #3: Thank you. If you wish to ask a question, please press *1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press *2.

Operator: Thank you. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star 2. If you are on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andre Fromyhr with UBS. Please go ahead.

Speaker #3: If you’re on a speakerphone, please pick up the handset to ask your question. Your first question comes from Andre from Maya with UBS. Please go ahead.

Speaker #1: Thank you, good morning. My first question is just about the operating context at the moment, and the demand sitting behind that. I guess what we're observing in your outlook commentary is a capacity reduction of 3%, but that's offset by stronger-than-trend RASK growth.

Andre Fromyhr: Thank you. Good morning. My first question is just about the operating context at the moment, and the demand sitting behind that. I guess what we are observing in your outlook commentary is capacity reduction, 3%, but offset by stronger than trend RASK growth. I guess my question is, how much of that is circumstantial, reacting to the higher fuel price environment? Or to what extent are you learning about the demand environment and customers' willingness to pay at certain fares and ancillary revenues that it doesn't all just revert back to lower fares and more capacity in the event that there is resolutions to the fuel price?

Speaker #1: And I guess my question is: how much of that is circumstantial—reacting to the higher fuel price environment—or to what extent are you learning about the demand environment and customers' willingness to pay at certain fares and for ancillary revenue? Is it the case that it doesn't all just revert back to lower fares and more capacity in the event that there's a resolution to the fuel price?

Speaker #2: Look, great question. Let me throw that to Paul Jones, our Chief Commercial Officer.

Dave Emerson: Look, great question. Let me throw that to Paul Jones, our Chief Commercial Officer.

Speaker #4: Thanks, Dave. Good morning. So, a couple of points I would note. The first is that the TRASK in H2 was 5.3%, and in Q4 was 6.4%.

Paul Jones: Thanks, Dave. Good morning. A couple of points I would note. The first is that the TRASK in H2 was 5.3%. Q4 was 6.4%. Your commentary around a change of trajectory for H1 FY27, we are guiding 6% to 8%, so it is consistent with recent performance from our point of view. The demand in the market remains really strong. We are seeing that in leisure. We are seeing that in B2B, both corporate and SME. Based on that, we feel really good about the demand outlook for the half. Post Iran crisis, we are expecting continued cost inflation that is above CPI in the industry and in our airline. We will need to continue being really disciplined around RASK growth to ensure that we do not have margin dilution as a result of that.

Speaker #4: And so, your commentary around a change of trajectory for H1 FY27—we're guiding 6 to 8%. So, it's consistent with recent performance from our point of view.

Speaker #4: The demand in the market remains really strong. We're seeing that in leisure, and we're seeing that in B2B—both corporate and SME. Based on that, we feel really good about the demand outlook for the half.

Speaker #4: Post-Iran crisis, we are expecting continued cost inflation that is above CPI in the industry and in our airline. And so, we'll need to continue being really disciplined around RASK growth to ensure that we don't have margin dilution as a result of that.

Speaker #2: Okay. And then if I could just ask one more, probably for RASK, about the capex guidance. Am I right to understand from the disclosures that $0.9 to $1 billion capex is just assuming fully owned, on-balance sheet, rather than utilization of leases?

Andre Fromyhr: Okay, and then if I could just ask one more, probably for Race about the CapEx guidance. Am I right to understand from the disclosures that that AUD 0.9 to AUD 1 billion CapEx, that is just assuming fully owned on balance sheet rather than utilizing of leases. I guess an extension to that is how much flexibility do you have over that order book or more broadly your CapEx in FY27 to be able to react if conditions worsen for you?

Speaker #2: And I guess an extension to that is: How much flexibility do you have over that order book, or more broadly your capex in FY27, to be able to react if conditions worsen for you?

Speaker #4: Yeah, thanks, Andrea. Yes, so the CapEx guidance we've given assumes that we will debt fund all seven new aircraft coming in during FY27.

Race Strauss: Yeah. Thanks, Andre. Yes. So the CapEx guidance we have given assumes that we will

Race Strauss: Yeah. Thanks, Andre. Yes. So the CapEx guidance we have given assumes that we will fund all seven new aircraft coming in in FY27. In terms of flexibility, we actually have quite a bit. We have a number of leases that are up for either extension or we can terminate those leases. So we actually have quite a bit of flexibility both in FY27 and in FY28.

Race Strauss: fund all seven new aircraft coming in in FY27. In terms of flexibility, we actually have quite a bit. We have a number of leases that are up for either extension or we can terminate those leases. So we actually have quite a bit of flexibility both in FY27 and in FY28.

Speaker #4: In terms of flexibility, we actually have quite a bit. We have a number of leases that are up for either extension, or we can terminate those leases.

Speaker #4: So, we actually have quite a bit of flexibility both in FY27 and in FY28.

Speaker #2: Okay. Thank you.

Andre Fromyhr: Okay. Thank you.

Speaker #3: Your next question comes from Justin Barrett with CLSA. Please go ahead.

Operator: Your next question comes from Justin Barratt with CLSA. Please go ahead.

Speaker #5: Hey guys, thanks for the opportunity. Really appreciate your comments on management in your prepared remarks. But I guess, just as an investment community, how should we be thinking about the opportunities for capital management going forward?

Justin Barratt: Hey, guys. Thanks for the opportunity. Race, appreciate your comments on capital management in your prepared remarks, but I guess just as an investment community, how should we be thinking about the opportunities for capital management going forward? I guess just asking in the context of, I guess we are in a pretty tough environment for an airline, and yet you have decided to pay a dividend. Is it fair to assume that we should be expecting some form of capital management per half going forward as long as things do not get meaningfully worse?

Speaker #5: I guess, just asking in the context of—we're in a pretty tough environment for an airline, and yet you have decided to pay dividends.

Speaker #5: So is it fair to assume that we should be expecting some form of capital management per half going forward, as long as things don't get meaningfully worse?

Speaker #4: Yeah, thanks, Justin. Look, we've been very clear that we're not giving a target payout ratio. We will apply our capital allocation framework at every reporting period and determine if there are surplus funds.

Race Strauss: Yeah. Thanks, Justin. Look, we have been very clear that we are not giving a target payout ratio. We will apply our capital allocation framework at every reporting period and determine if there are surplus funds. That will be the way we are going to do it. I would not take this as a target payout ratio. Rather, the commitment, we will apply the capital allocation framework at every period.

Speaker #4: So that will be the way we're going to do it. I would not take this as a target payout ratio. Rather, the commitment is that we will apply the capital allocation framework each period.

Speaker #5: Great, thanks. And then I wouldn't mind if you asked or spoke a little bit more about the investments that you plan to make in Velocity.

Justin Barratt: Great. Thanks. I would not mind if you asked or spoke a little bit more about the investments that you plan to make in Velocity. It does seem like it is a bit of a transformation year for that business. Looking to explore that in a little bit more detail, please.

Speaker #5: It does seem like it's a bit of a transformation year for that business, so I'm looking to explore that in a little bit more detail, please.

Speaker #1: Yeah. Let me hand that over to Andrew Cleary, who is our CEO of Velocity and Chief Customer Officer.

Race Strauss: Yeah. Let me hand that over to Andrew Cleary, who is our CEO of Velocity and Chief Customer Officer.

Dave Emerson: Yeah. Let me hand that over to Andrew Cleary, who is our CEO of Velocity and Chief Customer Officer.

Speaker #6: Yeah, thanks, Dave. Good morning, Justin. Look, we see huge potential ahead for Velocity to continue to be a growth driver for the group, and we're investing behind that now.

Andrew Cleary: Yeah. Thanks, Dave. Good morning, Justin. Look, we see huge potential ahead for Velocity to continue to be a growth driver for the group, and we are investing behind that now. As we have said in the guidance, the key opportunities in particular are there is very strong underlying momentum in external partner billings, FS, and other partners, as well as in the active member growth that we are seeing. When we look to the future, what we are investing is to build the technology, the data, and the personalization capabilities to further connect the partner ecosystem. A key plank of the strategy will be expansion in FS, including beyond cards. So the deal that we announced last week, with CommBank Yello, for example, is just one that we expect over the coming 12 months. Finally, we will be selectively growing in attractive adjacent value pools.

Speaker #6: As we've said in the guidance, the key opportunities in particular are there's very strong underlying momentum in external partner billings, FS, and other partners.

Speaker #6: As well as in the active member growth that we're seeing. When we look to the future, what we're investing in is building the technology, the data, and the personalization capabilities to further connect the partner ecosystem.

Andrew Cleary: A key plank of the strategy will be expansion in FS, including beyond cards. So the deal that we announced last week, with CommBank Yello, for example, is just one that we expect over the coming 12 months. Finally, we will be selectively growing in attractive adjacent value pools. We see opportunity in holidays, as well as e-commerce as we have outlined.

Speaker #6: A key plank of the strategy will be expansion in FS, including beyond cards. So, the deal that we announced last week with CBA Yellow, for example, is just one that we expect over the coming 12 months.

Speaker #6: And finally, we will be selectively growing and attracting adjacent value pools. We see opportunity in holidays, as well as e-commerce, as we've outlined.

Andrew Cleary: We see opportunity in holidays, as well as e-commerce as we have outlined.

Speaker #5: Thank you.

Justin Barratt: Thank you.

Speaker #3: Your next question comes from Lee Power with JPMorgan. Please go ahead.

Operator: Your next question comes from Lee Power with JPMorgan. Please go ahead.

Speaker #7: Morning. Thanks, thanks for that. Just going on from Andre's question around pricing, one of your—sorry, your peer talked yesterday about ancillary pricing and seemed to present it as an untapped avenue that they could push harder.

Lee Power: Morning. Thanks for that. Just going on from Andre's question around pricing. Your peer talked yesterday about ancillary pricing and seemed to present it as an untapped avenue that they could push harder. I am just trying to work out what work have you done around elasticity or the difference between pushing ticket price versus ancillary price increases and what you think that means, given that the cost story doesn't sound like it's slowing down.

Speaker #7: You obviously, in the comments before, seem to have a somewhat aligned view. So I guess I'm just trying to work out what work you have done, maybe around elasticity or the difference between pushing ticket price versus ancillary price increases, and what you think that means given the cost story doesn't sound like it's slowing down.

Speaker #4: Thanks for the question. So, it's Paul again. In terms of—we obviously have laid out, and you've seen the slides—ancillaries are a really important pillar of our value business model.

Paul Jones: Thanks for the question. Paul again. We obviously have laid out, and you've seen the slides, ancillaries is a really important pillar to our value business model. We have seen ancillary growth year-on-year, and we would expect that to continue into the future. Effectively, the changes that were announced in the market around baggage, and that is a significant change. We don't, at this point, plan a change to our baggage policies, and therefore it's effectively for those customers, a price increase for many of them in terms of what comes into the market next year. That means that we obviously will be reviewing how we handle that from a pricing point of view.

Speaker #4: We have seen ancillary growth year on year, and we would expect that to continue into the future. Effectively, the changes that were announced in the market around baggage—that is a significant change.

Speaker #4: We don't, at this point, plan a change to our baggage policies, and therefore, it's effectively a price increase for many of those customers in terms of what comes into the market next year.

Speaker #4: That means that we obviously will be reviewing how we handle that from a pricing point of view. So yes, ancillaries continue to be a really important lever.

Paul Jones: Ancillaries continues to be a really important lever, but more importantly from my point of view is the overall TRASK outcome that you get across the book, across actually managing the revenue pool as one revenue pool, as opposed to optimizing for the individual components.

Speaker #4: But more importantly, from my point of view, is the overall TRASC outcome that you get across the book, across actually managing the revenue pool as one revenue pool, as opposed to optimizing for the individual components.

Speaker #7: Okay, thank you. And then just going on to the CASC X fuel—so, above CPI, is there something, like—I don’t know, I’m just trying to work it out.

Lee Power: Okay. Thank you. Then just going on to the CASK ex fuel. So above CPI, is this like, I do not know. I am just trying to work out, is this something that we should be expecting as a medium-term thing? Is it something that is more short-term? Is there something else going on when we strip out fuel that you think from an industry we should be factoring in? Then maybe above CPI, if you want to give any sort of comment around what that actually means. How far above CPI?

Speaker #7: Is this something that we should be expecting as a medium-term thing? Is it something that's more short-term? Is there something else going on when we strip out fuel that you think, from an industry perspective, we should be factoring in?

Speaker #7: And then maybe above CPI, if you want to give any sort of comment around what that actually means—how far above CPI?

Speaker #4: Yeah, it's great. So look, Lee, the main point here in terms of—if you look at our cost drivers—one of our biggest cost bases, about 20% of our cost base, is airports.

Race Strauss: Yeah. It is Race. So look, Lee, the main point here in terms of if you look at our cost drivers, one of our biggest cost bases, about 20% of our cost base is airports. That is growing by 15%, and I would expect that to continue growing above inflation. It is important that we work with the airline partners to ensure we get the right investment that our customers want, but that we also get a return on that investment. So that is a key driver of cost going forward. Labor costs will obviously continue to be a growing cost going forward. What is really important for us is the transformation program. That as these costs, which are predominantly industry-based costs, continue, that the transformation program, which is embedded in our business, plays a key role in ensuring that we can get margin accretion.

Speaker #4: And that is growing by 15%. I would expect that to continue growing above inflation. It's important that we work with the airline partners to ensure we get the right investment that our customers want, but that we also get a return on that investment.

Speaker #4: So that is a key driver of cost going forward. Labor costs will obviously continue to be a growing cost going forward. What's really important for us is the transformation program.

Speaker #4: As these costs, which are predominantly industry-based costs, continue, the transformation program, which is embedded in our business, plays a key role in ensuring that we can get margin accretion.

Speaker #1: Excellent. Thank you.

Lee Power: Excellent. Thank you. You are clearly doing a good job of that. I really appreciate the color in it all. Thank you.

Speaker #7: You're clearly doing a good job of that. I really appreciate the color, Paul, in it all. Thank you.

Speaker #4: Thank you.

Race Strauss: Thank you.

Speaker #3: Your next question comes from Jacob Kakanas with Jordan Australia. Please go ahead.

Operator: Your next question comes from Jakob Cakarnis with Jarden Australia. Please go ahead.

Speaker #5: Good morning, Dave. Morning, Race. Maybe one for Andrew and Paul, potentially to share. But just that 6.4% fourth quarter RASC growth—I appreciate the answer to Andre's question that you probably see that continuing into the first half of '27.

Jakob Cakarnis: Morning, Dave. Morning, Race. Maybe one for Andrew and Paul potentially to share, but just that 6.4% Q4 RASK growth. Appreciate the answer to Andre's question that you probably hold that continuing into the H1 2027. Because there's no disclosure to trace this through, can you just give us a sense of how much load factors contributed to that 6.4% RASK, please?

Speaker #5: Because there's no disclosure to trace this through, can you just give us a sense of how much load factors contributed to that 6.4% RASC, please?

Speaker #7: Yes, thanks for the question. Load factor hasn't seen a significant change for us in the second half, half-on-half. With our business model, we would continue to expect a mid-80s load factor.

Paul Jones: Yes, thanks for the question. Load factor hasn't been a significant change for us in the H2, half on half. Our business model, we would continue to expect mid-80s load factor. It really hasn't been driven from a load factor gain perspective.

Speaker #7: So, it really hasn't been driven from a load factor gain perspective.

Speaker #5: Okay. So that was about 30 basis points year on year in the half. Quarter?

Jakob Cakarnis: Okay, so that was about 30 basis points year on year in the half. Is that about right for the Q4?

Jakob Cakarnis: Okay, so that was about 30 basis points year-on-year in the half. Is that about right for the Q4?

Speaker #4: That sounds right, but I'd want to go and check the numbers. That does sound right.

Paul Jones: That sounds right, but I would want to go and check the numbers. That does sound right.

Speaker #5: Yeah, okay. I guess where I'm getting is, there were some changes that you guys have been clearly disclosing about the fare buckets that you've used.

Jakob Cakarnis: Yeah, okay. I guess where I am getting there is, there were some changes that you guys have been clearly disclosing about the fare buckets that you have used, and just how effective that has been for your own revenue management. I am just wondering, when do we start cycling those, and do we interpret the RASK guidance moving forward as much more yield orientated? Appreciate you managing that from a TRASK perspective.

Speaker #5: And just how effective that's been for your own revenue management. I'm just wondering, when do we start cycling those? And do we interpret the RASC guidance moving forward as much more yield-orientated?

Speaker #5: Appreciate you're managing that from a TRASC perspective.

Speaker #4: Yeah. We're only giving guidance for half one TRASC. And our strategy will continue in half two. As we've said as a company, we need to ensure that our RASC growth exceeds our CASC growth in order for us to continue to improve margin.

Paul Jones: Yeah, we are only giving guidance for H1 TRASK, and our strategy will continue in H2. As we have said, as a company, we need to ensure that our RASK growth exceeds our CASK growth in order for us to continue to improve margin. I really cannot give much more color than that from a commercial competitive point of view.

Speaker #4: But I really can't give much more color than that from a commercial, competitive point of view.

Speaker #5: Okay, just one for Race. Appreciate the answer. Earlier, to Justin’s question—just not wanting to be drawn into committing to capital management. But I mean, the leverage, where you are and where you'll go versus target with the CapEx guidance—I'm sure it’s going to be on everyone’s mind.

Jakob Cakarnis: Okay. Just one for Race. Appreciate the answer earlier to Justin's question, just not wanting to be drawn into committing to capital management. The leverage where you are and where you will go versus target with the CapEx guidance, I am sure it is going to be on everyone's mind. Is there any way to think about, would the preference theoretically be as a consistent base dividend moving forward as a mix if it were to continue? Appreciating it is going to be reviewed every 6 months.

Speaker #5: So, is there any way to think about what the preference would theoretically be as a consistent base dividend moving forward, or as a mix, if it were to continue?

Speaker #5: Appreciating it's going to be reviewed every six months.

Speaker #4: Yeah. Look, we're not committing—to be crystal clear, we're not committing to any forward payout ratios. We are committing to apply our capital management framework.

Race Strauss: Yeah. Look, to be crystal clear, we are not committing to any forward payout ratios. We are committing to apply our capital management framework. We are expecting strong cash generation that is allowing us with our conservative balance sheet to continue to buy aircraft. Our commitment is we will be within the range of 1 to 2 times. If the capital allocation framework allows surplus funds, we will find the most effective way to get that back to shareholders. We are not committing to any payout ratio.

Speaker #4: We are expecting strong cash generation. That is allowing us, with our conservative balance sheet, to continue to buy aircraft. Our commitment is that we will be within the range of one to two times.

Speaker #4: If the capital allocation framework allows surplus funds, we will find the most effective way to return that to shareholders. But we are not committing to any payout ratio.

Speaker #5: Let me reframe it, Race. Given that you guys said in the first half that you were accruing franking credits and you've paid a fully franked dividend, I assume you're going to be accruing those moving forward with the tax paid position.

Jakob Cakarnis: Let me reframe it, Race. Given that you guys said from the H1 that you were accruing franking credits and you have paid a fully franked dividend, assume you are going to be accruing those moving forward with the tax paid position. Would the preference for capital management be as a dividend, as opposed to, say, other forms of capital return like on-market share buybacks?

Speaker #5: Would the preference for capital management be as a dividend, as opposed to, say, other forms of capital return like on-market share buybacks?

Speaker #4: Yes, in that, we will be increasing our franking credits—our franking balance. We know that our shareholders are predominantly Australian-based, so certainly that is a definite option for us.

Race Strauss: Yes, in that we will be increasing our franking credits, our franking balance. We know that our shareholders are predominantly Australian-based. Certainly that is a definite option for us, that should there be shareholder returns in the future, the paying of fully franked dividends is the most likely approach. We will consider what is the most effective way to return funds at each process.

Speaker #4: Should there be shareholder returns in the future, the paying of fully franked dividends is the most likely approach. However, we will consider what is the most effective way to return funds at each process.

Speaker #5: Thanks, Race. We got there. Thanks for the question.

Jakob Cakarnis: Thanks, Race. We got there. Thanks for the question.

Race Strauss: Thank you.

Speaker #4: Thank ank you.

Speaker #3: Your next question comes from Tom Payton with RBC Capital Markets. Please go ahead.

Operator: Your next question comes from Tom Peyton with RBC Capital Markets. Please go ahead.

Tom Peyton: Hi. Good morning, Dave, Race, and team. I just wanted to ask a couple questions about Velocity. You flagged the double-digit growth in FY2028/2029, the low double digit. I am just wondering whether that is a per year CAGR and whether we should be thinking about that as like a back-ended program or a linear, consistent step up.

Speaker #6: Hi, good morning, Dave, Race, and team. I just wanted to ask a couple of questions about velocity. You sort of flagged the double-digit growth in FY28/29, the low double-digit.

Speaker #6: I'm just wondering whether that's per-year CAGR, and whether we should be thinking about that as a back-ended program, or a sort of linear, consistent step-up.

Speaker #4: Yeah, sure. So, for FY27, we're obviously ramping up that investment. So, a lot of the cost is coming through this year ahead of the revenue that will be driven by that investment.

Andrew Cleary: Yeah, sure. FY2027, we are obviously ramping up that investment. A lot of the cost is coming through this year ahead of the revenue that will be driven by that investment. Then expecting double-digit growth in both FY2028, low double-digit growth as we have guided in both FY2028 and FY2029. We have not guided beyond the three-year period.

Speaker #4: And then expecting double-digit growth in both FY28—low double-digit growth, as we've guided, in both FY28 and FY29. We haven't guided beyond the three-year period.

Speaker #6: No, that's fair enough. Thank you. Another one on Velocity. The margins were up for '26, and then the EBIT is expected to be flatter in '27.

Tom Peyton: No, that is fair enough. Thank you. Another one on Velocity. The margins were up for 2026, and then the EBIT is expected to be flatter in 2027. Are you expecting that margin growth to unwind?

Speaker #6: Are you expecting that margin growth to unwind?

Speaker #4: Yeah. Look, I think this one's quite simple. We spoke in the release about the impact of the Middle East conflict on redemption activity. So, specifically for us, that's lower partner airline redemption activity.

Andrew Cleary: Yeah, look, I think this one is quite simple. We spoke in the release about the impact of the Middle East conflict on redemption activity. Specifically for us, that is lower partner airline, redemption activity. That resulted in us spending less on partner airlines. You see the predominant driver behind that margin increase in 2026 was that redemption mix activity. We expect that to normalize over the course of FY27, hence we expect that margin increase in 2026 to also unwind back to historical levels.

Speaker #4: So that resulted in us spending less on partner airlines. So you see, the predominant driver behind that margin increase in '26 was that redemption mix activity.

Speaker #4: We expect that to normalize over the course of FY27. Hence, we expect that margin increase in '26 to also unwind back to historical levels.

Speaker #6: Appreciate it. Thank you.

Tom Peyton: Appreciate it. Thank you.

Speaker #3: Your next question comes from Sam So with Citi. Please go ahead.

Operator: Your next question comes from Sam Seow with Citi. Please go ahead.

Speaker #7: Well, thank you, and good morning, all. Just a quick question on RASC. I assume short-haul international is a drag on the overall RASC outlook.

Sam Seow: Well, thank you, and morning all. Just a quick question on RASK. I assume short-haul international is a drag on the overall RASK outlook. I just wanted, one, to confirm that is the case, and then two, if there is any color that you can provide us to help frame up, I guess, what the underlying domestic RASK is versus what, I guess, the overall airline number is. Thanks.

Speaker #7: I just want to, one, confirm that's the case, and then two, see if there's any color you can provide to help frame that up.

Speaker #7: I guess what the underlying domestic RASC is versus what, I guess, the overall airline number is. Thanks.

Speaker #4: Yeah, thanks for the question. So yes, the RASC number we guide and report is for all of the company, so it does include short-haul international.

Paul Jones: Yeah. Thanks for the question. So yes, the RASK number we guide and report is for all of companies, so it does include short-haul international. The way I would think about it is we probably have about a one point difference between domestic RASK and the overall company RASK. To give you an example as color to that, the startup of Canberra-Denpasar, for example, is one of the reasons that you would see a difference between those two, as we build into a new route.

Speaker #4: The way I would think about it is we probably have about a one-point difference between domestic RASC and the overall company RASC. And to give you an example or some color to that, the start-up of Canberra-Denpasar, for example, is one of the reasons that you would see a difference between those two, as we build into a new route.

Speaker #7: Thank you, that's helpful. And then on Velocity, I guess I'm keen to understand the shape of that profitability you expect in the business via October. RBA start date implies more of a second-half impact.

Sam Seow: Thank you. That is helpful. Then on Velocity, I guess I am keen to understand the shape of that profitability you expect in the business. The October RBA start date implies more of a H2 impact, but then you are also expecting a strong FY28, which suggests a reasonable exit rate. Just trying to understand the profile, EBIT, you expect in the Velocity business. Thank you.

Speaker #7: But then you're also expecting a strong FY28, which suggests a reasonable exit rate. So, just trying to understand the profile EBIT you expect in the Velocity business.

Speaker #7: Thank you.

Speaker #4: Yeah. Look, there are definitely multiple moving parts here. So obviously, the impact is coming through from the RBA reset from October 1, so that would be more skewed to the second half.

Andrew Cleary: Yeah, look, there is definitely multiple moving parts here. So obviously the impact is coming through from the RBA reset from 1 October, so that will be more skewed to the H2. All through the course of FY27, we will see continued growth in the non-FS part of the portfolio, with that, the momentum there has not changed at all and in fact is looking really healthy. At the same time, there is the third driver, which is the ramp-up of the investment, and that will be reasonably consistent throughout the year. What the fourth factor then is the revenue that comes in from that transformation initiative, and that will be backdated in FY27, mostly impacting FY28.

Speaker #4: Throughout FY27, we'll see continued growth in the non-FS part of the portfolio. The momentum there has not changed at all.

Speaker #4: And in fact, it's looking really healthy. And then at the same time, there's the third driver, which is the ramp-up of the investment. And that would be reasonably consistent throughout the year.

Speaker #4: The fourth factor, then, is the revenue that comes in from that transformation initiative, and that will be backdated in FY27, mostly impacting FY28.

Speaker #7: Thank you. That's actually really helpful. I appreciate the extra color.

Sam Seow: Thank you. That's actually really helpful. I appreciate the extra color.

Speaker #3: Your next question comes from Cameron McDonald with E&P. Please go ahead.

Operator: Your next question comes from Cameron McDonald with E&P. Please go ahead.

Speaker #8: Good morning. A couple of questions, if I can. So firstly, just in terms of the guidance relating to the capex, you've also got, in this year, $250-odd million worth of lease rate payments.

Cameron McDonald: Good morning. Couple of questions if I can. Firstly, just in terms of the guidance relating to the CapEx, you've also got in this year AUD 250 odd million worth of lease repayments. How do we think about that lease repayment profile into next year as well, given that you said that the financing is all with the AUD 900 to AUD 1 billion all debt-financed?

Speaker #8: How should we think about that lease rate payment profile into next year as well, given that you've said the financing is all within the $900 million to $1 billion and all debt financed?

Speaker #4: Yeah. Cameron, the lease rate payments—you shouldn't really look at the capex side. That'll come through in terms of the D&A and the interest.

Race Strauss: Cameron, the lease repayments, you shouldn't really look at the CapEx side. That'll come through in terms of the D&A and the interest. The CapEx guidance is the AUD 900 to AUD 1 billion. As I said, that will include purchasing all of the aircraft. The D&A is showing an increase, and that's where the lease repayments go and in our interest line.

Speaker #4: So the CapEx guidance is the $900 million to $1 billion. As I said, that will include purchasing all of the aircraft. The D&A is showing an increase, and that's where the lease rate payments go.

Speaker #4: And in our interest line.

Speaker #8: Yeah, I get that. But leases come out before dividends, so how do we think about that lease rate payment profile into next year?

Cameron McDonald: Yeah, I get that, but leases come out before dividends, so how do we think about that lease repayment profile into next year?

Race Strauss: It is fairly similar with slight reductions. We have picked up some of the 13 aircraft that. We have taken 17 aircraft this year. 13 of those were leases. They are MAX 8 aircraft. They are at a higher lease rate. So there will be a slightly higher, lease rates in FY27, but we are not taking any more leased aircraft. So you need to factor in the lease rates for the 13 aircraft that we have picked up this year will flow through to FY27, so that rate will be higher.

Speaker #4: It's fairly similar, with slight reductions. We have picked up some of the 13 aircraft—sorry, we've taken 17 aircraft this year; 13 of those were leases.

Speaker #4: There are a maximum of eight aircraft. They are at a higher lease rate, so there will be slightly higher lease rates in FY27. But we are not taking on any more leased aircraft.

Speaker #4: So, you need to factor in the lease rates for the 13 aircraft that we've picked up this year. That will flow through to FY27, so that rate will be higher.

Race Strauss: Okay. Thank you. Just in terms of the capacity guidance, can you break it down also between regional and in particular mining? Some of the data that I have seen indicates that you might be growing a bit more in that mining space. Is that correct? How are you making that distinction? Maybe it is hitting VARA rather than domestic.

Cameron McDonald: Okay. Thank you. Just in terms of the capacity guidance, can you break it down also between regional and in particular mining? Some of the data that I have seen indicates that you might be growing a bit more in that mining space. Is that correct? How are you making that distinction? Maybe it is hitting VARA rather than domestic.

Speaker #8: Okay, thank you. Just in terms of the capacity guidance, can you break it down also between regional and, in particular, mining? Some of the data that I've seen indicates that you might be growing a bit more in that mining space.

Speaker #8: Is that correct? And how are you making that distinction? And maybe it's Envara rather than Domestic.

Speaker #4: Yes. So we have been careful around the network discipline, both to date and going forward, because we are seeing really strong demand, for example, intra-WA.

Paul Jones: Yes. We have been careful around the network discipline, both to date and forward, because we are seeing really strong demand, for example, intra WA, and we have been having some success with WA B2B clients. I think the way you are reading the network capacity around those clients and that network is correct.

Speaker #4: And we've been having some success with our WA B2B clients, and so I think the way you are reading the network capacity around those clients, and that network, is correct.

Dave Emerson: Clients. I think the way you are reading the network capacity around those clients and that network is correct.

Speaker #8: Yeah. Some of the intra-WA network changes do look to be very strong on some routes, particularly in terms of the capacity growth, right?

Cameron McDonald: Yeah. Some of the IntraWA network changes do look to be very, on some routes, particularly strong, in terms of the capacity growth.

Speaker #4: Yes. Understand.

Paul Jones: Yes. Understand.

Speaker #8: Yeah. On the hedging for the fuel, how is that actually structured? Noting that there was a $143 million hedging gain in this year. How is that structured on the guidance for the $700 with the 96% rent and 20% refining margin?

Cameron McDonald: Yeah. On the hedging for the fuel, how is that actually structured, noting that there was AUD 143 million hedging gain in this year? How is that structured on the guidance for the 700 with the 96% Brent and 20% refining margin? Is that a swap? Is it options? What's the participation on downside from the current fuel prices?

Speaker #8: Is that a swap? Is it options? What's the participation on the downside from the current fuel prices?

Speaker #4: Yeah. Let me take that one, Cameron. So for our Brent, it's predominantly with options. So we would have significant participation on our — of the 96%.

Race Strauss: Yeah. Let me take that one, Cameron McDonald. For our Brent Crude, it is predominantly with options. So we would have significant participation of the 96%. For the refining margin, it is more on swaps because it is uneconomical to get options on refining margin. So, you should consider our refining margin based on swaps.

Speaker #4: For the refining margin, it is more on swaps because it is uneconomical to get options on refining margin. So, you should consider our refining margin based on swaps.

Speaker #8: Okay, that's helpful. Thank you. And last one for me—and I appreciate this is in non-operating, so in terms of the P&L—but the $75 million worth of COVID credits, that boosted the statutory number.

Cameron McDonald: Okay. That is helpful. Thank you. Last one from me, I appreciate this is, it is in non-operating, so in terms of the P&L, but the AUD 75 million worth of COVID credits that boosted the statutory number. Firstly, why not just extend them in perpetuity the same way as your competitor has done? Secondly, what is the impact on the cash flow? How is that 75 credit treated from a balance sheet perspective and any claim on future cash? Has that actually increased your available cash and hence reduced your, or benefited the capital allocation framework?

Speaker #8: Firstly, why not just extend them in perpetuity, the same way as your competitor has done? And then secondly, what's the impact on the cash flow?

Speaker #8: How is that $75 credit treated from a balance sheet perspective in any claim on future cash? And does that actually increase your available cash and hence benefit the capital allocation framework?

Speaker #4: Yeah. Look, this is Dave. I'll take that. With regards to those credits, I think the key points that we would make are that, right from the beginning, those credits were available, easy to use, and we made really strong efforts to get our customers to use them.

Dave Emerson: Yeah. Look, this is Dave Emerson, I will take that. With regards to those credits, I think that the key points that we would make is that right from the beginning, those credits were available, easy to use, and we made really strong efforts to get our customers to use them. There was four to six years they were available. We extended the credits multiple times, to make sure that customers had every chance to access them. By the end, 93% of the credits were used. Then, the program expired. I think that it is key to note that it had no impact on underlying EBIT, as you know, but also there was no cash impact. It was a non-cash event. So it did not have anything to do with the decision to pay dividends or not.

Speaker #4: There were four to six years they were available. We extended the credits multiple times to make sure that customers had every chance to access them.

Speaker #4: And by the end, sort of 93% of the credits were used. And then the program expired. And I think that there was it's key to note that it had no impact on underlying EBIT.

Speaker #4: As you know, but also there was no cash there was no cash impact. It was a non-cash event. So it didn't have anything to do with the decision to pay dividends or not.

Speaker #8: Oh, I suppose it's a reduction in the future potential claim on cash, though.

Cameron McDonald: I suppose it is a reduction in the future potential claim on cash, though.

Race Strauss: If you are referring to, if you could use your credit and not buy a ticket, if that is what you are referring to. But it is a non-cash item.

Speaker #4: If you're referring to whether you could use your credit and not buy a ticket, if that's what you're referring to, but it is a non-cash.

Speaker #8: Yeah, that's right. Yeah. Yeah.

Cameron McDonald: Yeah, that is right.

Race Strauss: Yeah.

Cameron McDonald: Yeah.

Speaker #4: Yeah. But these credits are being used, so this is a non-cash item.

Race Strauss: Yeah. These credits are being used. So this is a non-cash item.

Speaker #8: Yeah. But once again, it was not—even if people were using the credit—it was not a cash cost to us. Right. Okay. Thank you.

Cameron McDonald: Yeah.

Dave Emerson: But once again, even if people are using the credit, it is not a cash cost to us.

Cameron McDonald: Right. Okay. Thank you.

Speaker #1: Your next question comes from Niraj Shah with Goldman Sachs. Please go ahead.

Operator: Your next question comes from Niraj Shah with Goldman Sachs. Please go ahead.

Speaker #2: Good morning, guys. Thanks for taking my questions. First one, appreciate your comments on intra-WA, but just more generally, I'd be interested in hearing your thoughts on how you've seen market shares across the three key segments evolve over the last 12 months.

Niraj Shah: Morning, guys. Thanks for taking my questions. First one, I appreciate your comments on IntraWA, but just more generally, I would be interested in hearing your thoughts on how you have seen market shares across the three key segments evolve over the last 12 months.

Speaker #8: Yeah, maybe this is Dave. I'll take that. I think one of our core transformation initiatives is to continue to grow share in our target segments, right?

Dave Emerson: Yeah, maybe this is Dave, I will take that. I think one of our core transformation initiatives is to continue to grow share in our target segments, right? So that is small business, corporate, and premium leisure. And we continued to have momentum in the B2B sector, and we do believe that the shares increased over the last year.

Speaker #8: So that's small business, corporate, and premium leisure. And we continue to have momentum in the B2B sector, and we do believe that the shares increased.

Speaker #8: Over the last year.

Speaker #2: Got it. Thank you. And then the second one, just on velocity. That acceleration to low double-digit growth in fiscal '28 and '29—can you give us any sense of how much of that would be, I guess, the traditional points business versus new activities you guys are looking to enter and grow in?

Niraj Shah: Got it. Thank you. The second one just on Velocity, that acceleration to low double-digit growth in fiscal 2028 and 2029. Can you give us any sense of how much of that would be, I guess, the traditional points business versus new activities you guys are looking to enter and grow in?

Speaker #4: Yeah. Andrew here. Look, we're not breaking it out. But given that the vast majority of the business today is the traditional, in your language, points coalition, I think that you should expect that's where the majority of that earnings uplift will come from.

Andrew Cleary: Yeah, Andrew here. Look, we are not breaking it out, but given that the vast majority of the business today is the traditional, in your language, points coalition, I think that you should expect that that is where the majority of that earnings uplift will come from. Again, when we are looking at the portfolio, the largest single opportunity is in FS expansion, and growing beyond credit cards. So, I would point you to the type of announcement that you saw, this more whole-of-bank partnership with CommBank Yello, as an example of how we think the market will evolve. We have got a very attractive opportunity to participate in that market evolution. But yeah, in terms of those adjacent businesses that we mentioned, it would definitely be a smaller part of the contribution.

Speaker #4: And again, when we're looking at the portfolio, the largest single opportunity is in FS expansion and growing beyond credit cards. So I'd point you to the type of announcement that you saw—this more whole-of-bank partnership with CBA Yellow—as an example of how we think the market will evolve.

Speaker #4: And we've got a very attractive opportunity to participate in that market evolution. But yeah, in terms of those adjacent businesses that we mentioned, it will definitely be a smaller part of the contribution.

Speaker #2: Understood. Thank you.

Niraj Shah: Understood. Thank you.

Speaker #1: Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Matt Ryan with Barrenjoey.

Operator: Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Matt Ryan with Barrenjoey. Please go ahead.

Speaker #1: Please go ahead.

Speaker #8: Oh, good morning. Just interested in where you're at with your EBAs and anything that we need to know about in terms of what's coming up.

Matt Ryan: Oh, good morning. Just interested in where you are at with your EBAs, and anything that we need to know about in terms of what is coming up.

Speaker #4: Yeah. Look, we're in active negotiations with the majority of our work groups now, and that's normal as we go through this cycle. We have, sort of, every three years—just the way the EBAs are set up.

Dave Emerson: Yeah, look, we are in active negotiations with the majority of our work groups now, and that is normal as we go through this cycle every three years, just the way the EBAs are set up. What I would characterize is that the negotiations that we are undertaking now are constructive and we have good relationships with our union partners and with our employees. We have gotten to fair deals that both sides can live with historically, and that is what I expect we will get to going forward.

Speaker #4: But what I would characterize is that the negotiations we're undertaking now are constructive, and we have good relationships with our union partners and with our employees.

Speaker #4: And so we've gotten to sort of fair deals that both sides can live with, historically. And that's what I expect we'll get to going forward.

Speaker #8: Thank you. Can I just ask about the refining margin hedging at 20%? I imagine that's pretty expensive to do, so I'm just interested in how you landed at 20% as, I guess, the optimal level.

Matt Ryan: Thank you. Can I just ask about the refining margin hedging at 20%? I imagine that is pretty expensive to do, so I am just interested in how you landed at 20% as, I guess, the optimal level. Is this something that has been brought on by what we would call extreme volatility in the refining margin at the moment, or is it something that you see as more of a permanent feature in how you would like to risk adjust your fuel bill?

Speaker #8: And is this something that, I guess, has been brought on by, I guess, what we'd call extreme volatility in the refining margin at the moment?

Speaker #8: Or is it something that you see as more of a permanent feature, and how you'd like to, I guess, risk adjust your fuel bill?

Speaker #4: Yeah, Matt, let me address that one. So, we run a very sophisticated treasury slash hedging operation. We've always looked at refining margin. We're talking, like, every day—twice a day, for example—we are looking at what's going on in the markets.

Race Strauss: Yeah, Matt, let me address that one. We run a very sophisticated treasury/hedging operation. We have always looked at refining margin. We are talking every day, twice a day, for example, we are looking at what is going on in the markets. What is important is to make sure that any hedging opportunities are economical. It is not that we have landed on 20% as any particular target, it is about making sure, have we got the right economical hedging on what is available? Part of the problem with refining margin going forward is it is just not economical because there is no one on the other side to take the other side of the hedge, so it just becomes uneconomical. We are always looking what is the right level of protection for the business at the right financial economics, rather than trying to hit any particular target.

Speaker #4: What's important is to make sure that any hedging opportunities are economical. So it's not that we've landed on 20% as any particular target; it's about making sure we have the right economical hedging on what's available.

Speaker #4: Part of the problem with refining margin going forward is it is just not economical, because there's no one on the other side to take the other side of the hedge.

Speaker #4: So it just becomes uneconomical. So we are always looking at what is the right level of protection for the business at the right financial economics, rather than trying to hit any particular target.

Race Strauss: Our policy has always allowed us to hedge both Brent and refining margin in a declining wedge, which just buys the business time to react. With these ones, as I mentioned, with the 20%, it is predominantly swaps, and that is because they were economical at the time. Going forward, as of right now, they are not economical, but we will continue to assess the market to see any further opportunities as they arise.

Speaker #4: Our policy has always allowed us to hedge both Brent and refining margin in a declining wedge, which just buys the business time to react.

Speaker #4: We do, with these ones, as I mentioned, with the 20%, it is predominantly swaps. And that's because they were economical at the time. Going forward, as of right now, they are not economical, but we will continue to assess the market to see any further opportunities as they arise.

Speaker #8: Thanks, Rice.

Matt Ryan: Thanks, Race.

Speaker #1: There are no further questions at this time. I'll now hand back to Dave Emerson for closing remarks.

Operator: There are no further questions at this time. I will now hand back to Dave Emerson for closing remarks.

Speaker #5: I'll just close by saying thank you all for your time. We're very proud of this result, and we look forward to talking to you again in six months.

Dave Emerson: I just close, thank you all for your time. We are very proud of this result, and we look forward to talking to you again in six months. Thank you.

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Q4 2026 Virgin Australia Holdings Ltd Earnings Call

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