Virgin Australia will press ahead with its costly change program despite losing AUD481m for the 13/14 financial year and, to help ease the financial pain, has sold 35% of its frequent flyer program to Affinity Equity Partners for $336 million.

CEO John Borghetti said the airline had been through “one of the most difficult operating environments in the history of Australian aviation” with excess capacity hurting fares, yield and load on its domestic and international networks.

International short-haul, especially the Bali route, was among the hardest hit.

Tigerair Australia, its low-cost JV with Singapore Airlines,  also performed poorly, losing almost $1m a week for Virgin Australia through the year.

Mr Borghetti played down Tigerair Australia’s woes saying the carrier is “now well positioned to benefit from a recovery in the domestic market when conditions improve.”

Unfortunately there’s no sign of a rebound in sight.

The supply v demand imbalance – seats growing faster than passenger numbers – is a well-entrenched fact of life for both the Australian and Southeast Asian markets.

Virgin Australia is the latest regional airline (see Qantas and Malaysia Airlines) to post a poor result.

Air New Zealand is the notable exception.

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