HY15 results presentation - VAH 19 February 2015

2

Year in review to date

• FY14 – one of the most difficult operating environments in the history of Australian aviation

• H1 FY15

– Ongoing weak consumer sentiment – total domestic passengers decline of 0.7%1

– Moderation in industry domestic capacity growth

– Decline in fuel price

• Significant improvement in financial performance

Notes: 1 Total revenue passengers, including domestic passengers on international flights, for six months to December 2014 compared to prior comparable period to December 2013 Source: Bureau of Infrastructure, Transport and Regional Economics (BITRE)

3

VAH Group – H1 FY15 financial summary

• Underlying Profit Before Tax1 of $10.2m – improvement on loss of $45.4m

• Positive Group Yield2 and Domestic Yield growth

• Underlying Group CASK3 reduction of 3.2%, including fuel and foreign exchange – CASK reduction of 3.6%, excluding Tigerair and fuel

• Benefit of ~$3m in fuel costs compared to H1 FY14

• Total cash position of $1.1b – up from $783.8m as at 30 June 2014

• Reducing financial leverage4

• Underlying profit for Tigerair of $0.5m in Q2 FY15 – first quarterly profit since December 2010

Note: 1 Underlying profit before tax is a non-statutory measure used by Management and VAH’s Board as a measures to assess the financial performance of VAH and is defined on slide 26; 2 Yield is a non-statutory measure and is defined on slide 27; 3 Underlying CASK is a non-statutory measure and is defined on slide 27; 4 Financial leverage is a non-statutory measure and is defined on slide 27

4

Effective hedging policy – benefits of fuel price decrease to impact H2 FY15 performance

Effective fuel rate vs physical cost (H1 FY14 – H1 FY15) Index1

• Policy provides a degree of certainty and risk protection against market volatility

• Fuel unit cost broadly in line with market rates

• Benefit of ~$3m in H1 FY15

– Strong hedging benefit in H1 FY14

• Expect further benefit2 in H2 FY15

Note: 1 Indexed to H1 FY14 physical cost; 2 Based on current hedging position and market rates

90

95

100

105

H1 FY14 H2 FY14 H1 FY15

Average actual price, inclusive of hedging

Average market price, exclusive of hedging

Benefit achieved in FY14

5

Virgin Vision – on track to achieve all targets

• Continued increase in Corporate and Government share of domestic revenue

• Completed Tigerair Australia acquisition

• Continued growth in Charter revenue

• Growing Velocity Frequent Flyer – membership now 4.8m

• Achieved $312.6m in cumulative cost reductions to date

• Raised US$300m through maiden issue of unsecured notes in debt capital markets

• Enhanced the customer experience – in top 10 airlines in the world for Business Travel1

Note: 1 Conde Nast, World’s Best Airlines for Business Travellers: Readers’ Choice Awards 2014

6

Investing to deliver a superior customer experience

• New A330 Business class suites from mid-2015 • New B777 Business class suites and Premium Economy

cabin by end of 2015 • Introduction of Business class on Trans Tasman and

Pacific Island services – from February 2015 • New Perth terminal, with direct connection with

regional terminal, and Lounge in H2 2015 • Ongoing Lounge network expansion – new Lounge in

Darwin and Alice Springs in March 2015, and expansion of Brisbane from March 2015

• Expanded premium services – new Brisbane Premium Entry from August 2015

7

Successful initiatives to drive OTP1

On time performance1 by airline group2

(Jul 14 – Dec 14) Percent

On time performance1 – VA brand vs QF brand3

(Jul 14 – Dec 14) Percent

75

80

85

90

Jul-1

4

Aug-

14

Sep-

14

Oct

-14

Nov

-14

Dec-

14

VA brand QF brand

75

80

85

90

Jul-1

4

Aug-

14

Sep-

14

Oct

-14

Nov

-14

Dec-

14VA Group QF Group

Notes: 1 In accordance with the Bureau of Infrastructure, Transport & Regional Economics definitions, flight departure is counted as "on time" if it departs the gate within 15 minutes of the scheduled departure time shown in the carriers' schedule; 2 Compares the departure OTP results of Virgin Australia Group operations (Virgin Australia and Virgin Australia Regional Airlines) with Qantas Group operations (Qantas, QantasLink and Jetstar); 3 Compares the departure OTP results of Virgin Australia branded airlines with Qantas branded airlines.

Leading major carrier in OTP for Q2 FY15 – positive momentum moving into H2 FY15

8

Velocity delivering value to members

Velocity metrics (H1 FY11 – H1 FY15) Index (100 at H1 FY11)

0

50

100

150

200

250

300

350

H1 FY11 H1 FY12 H1 FY13 H1 FY14 H1 FY15

Members Billings Redemptions

• Increasing earn options – First loyalty program to launch

partnerships with Australia Post and Aussie Home Loans

– New BP partnership announced

• Improving redemption opportunities – New points transfer with KrisFlyer – Online store redemptions up 44% on

pcp1 in December 2014

• Continued strong member growth

– Growth of 20% since December 2013

Note: 1 Prior comparable period

9

Charter and cargo on track to achieve strategic outcomes

Charter

• Won 3 new clients from competitors – services into the Pilbara and Kalgoorlie

• Acquisition of aircraft to support committed contracted growth under existing contracts

• Establishing F50 charter base in Queensland from March 2015 to support expansion in the east coast

Cargo

• Strategy on track to enable achievement of strategic vision

• Implementing new dedicated cargo IT system

10

Tigerair – positive momentum to achieve sustainable profitability

• Significant progress in driving revenue growth

• Maintaining low cost base

• Delivering cost synergies

• Improving aircraft utilization

• Restructured network footprint

11

On target with $1b cost reduction program – $312.6m savings achieved to date

CASK growth (FY10 to FY14 & H1 FY15) Percent

2.6

(3.6) (3.2)

(6.0)

(4.0)

(2.0)

0.0

2.0

4.0

FY10 to FY14 H1 FY15 (exclTigerair &

fuel)

H1 FY15 (inclfuel & foreign

exchange)

Component Examples

Fleet • Retirement of older 2 x A330 aircraft

Operations • Fuel efficiency initiatives

Commercial • Optimised sales distribution channels

People • Labour costs

Procurement • Contract costs

12

Ongoing improvements in balance sheet position

• Maintained strong total cash position – now $1.1b, up from $783.8m at 30 June 2014

• Unrestricted cash position of $838.8m, up from $541.0m at 30 June 2014

• Diversifying sources of funding – maiden issue in unsecured debt capital market

• Higher levels of liquidity

• Reducing financial leverage1

Note: 1 Financial leverage is a non-statutory measure and is defined on slide 27

13

2017

Cargo

Charter

Velocity

Tigerair Australia

Optimising the balance sheet

Capitalise on growth business

opportunities

Setting a new standard in customer experience and developing our people to their full potential

$150-$200m revenue

$200m+ revenue

7 million+ members

Maintain a strong cash balance

Profitable

Strategic Priorities

Drive yield enhancement

Cost reduction program

~30% of VA domestic revenue from corp. & gov.

$1bn1

Virgin Vision 2017 scorecard

Progress

Building strong momentum as a result of our strategy

Ongoing

Note: 1 Cumulative over the five years to 30 June 2017

14

Virgin Australia: delivering on a long term strategy

• Proven record in delivery of a consistent strategy – meeting targets ahead of schedule

Strong execution of strategy

• Delivering a new standard in customer experience and service excellence with the best people in the industry Customer focussed

• Diversifying earnings across growing business segments will deliver yield growth

Targeting revenue and yield growth

• Delivering business efficiencies, strengthening the balance sheet, and maintaining cost leadership

Improving business resilience

15

Guidance

“Expect an improved performance in the second half of the 2015 financial year compared to the second half of the 2014 financial year.

However, due to current market conditions, we are not able to provide more

specific guidance”

Financial results – H1 FY15

17

Pathway to growth and value creation

• Early completion of Game Change goals • Launch of next phase of strategic vision 2014

Transition from Game Change to Virgin

Vision

2015 Building momentum of success towards

Virgin Vision

2016-2017

Delivering value and sustainable outcomes

• Improving financial performance: yield1 growth, CASK2 decline, and improving profitability

• Stronger balance sheet – higher cash balance

• Long term revenue growth and margin expansion • Maintain cost leadership position • Positive cash generation and strong balance sheet

Note: 1 Yield is a non-statutory measure and is defined on slide 27; 2 Underlying CASK is a non-statutory measure and is defined on slide 27

18

H1 FY15

$m

Restated H1 FY141

$m

Revenue and income 2,377.5 2,242.1

Statutory loss after tax (47.8) (74.3)

Addback Income tax benefit (13.7) (30.2)

Statutory loss before tax (61.5) (104.5)

Addback Restructuring and transaction costs2 42.9 58.3

Share of equity accounted losses3 15.8 19.3

Losses / (gains) on unrealised ineffectiveness on cash flow hedges and non designated derivatives4 9.8 (33.8)

Losses on time value movement on cash flow hedges4 3.2 15.3

Underlying profit / (loss) before tax excluding one-off items, equity accounted losses and hedging and financial instruments 5 10.2 (45.4)

Group financial summary

Note: 1 The Group has changed its accounting policy for heavy maintenance in the prior year and adopted AASB 9 – Financial Instruments from 1 July 2014 which has resulted in prior period restatements; 2 Restructuring and transaction costs is a non-statutory measure and is defined on slide 26; 3 Refers to Tiger Airways Australia Pty Limited and Virgin Samoa Limited. Results for Tiger Airways Australia Pty Limited have been equity accounted for the period from 1 July 2014 to 16 October 2014; 4 These items are non-statutory measures outlined in Note 6 of the Virgin Australia Holdings Limited Interim Financial Report for the half-year Ended 31 December 2014; 5 Underlying profit / (loss) before tax excluding one-off items, equity accounted losses and financial instruments is a non-statutory measure used by Management and VAH’s Board as a measure to assess financial performance of VAH and is defined on slide 26

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Domestic International

H1 FY15

$m

Restated H1 FY141

$m

H1 FY15

$m

Restated H1 FY141

$m

Segment revenue2 1,832.6 1,694.1 596.0 589.7

Segment EBIT 2,3 103.8 25.9 (49.5) (31.9)

ASKs (m) (excludes charter)2 14,594 13,568 8,187 7,972

Load factor2 78.2% 78.4% 82.0% 80.2%

Segment revenue and EBIT summary

Note: 1 The Group has changed its accounting policy for heavy maintenance in the prior year and adopted AASB 9 – Financial Instruments from 1 July 2014 which has resulted in prior period restatements; 2 Consolidated results for Tiger Airways Australia Pty Limited have been included from 17 October 2014 until 31 December 2014; 3 Domestic / International Segment EBIT is a non-statutory measure used by Management and VAH’s Board as a measure to assess financial performance of VAH and individual segments and is defined on slide 26

20

Equity Accounted

Results 1- Jul-14 to 16-Oct-14

$m

Consolidated Results

17-Oct-14 to 31-Dec-14

$m

Tiger

Results H1

FY15 $m

Earned revenue 130.0 75.5 205.5

Statutory (loss)/profit before tax (26.3) 1.5 (24.8)

VAH Share of Tigerair Australia Equity Accounted Losses @ 60% (15.8)

Treatment of Tiger Airways Australia Pty Limited1

Note: 1 Results for Tiger Airways Australia Pty Limited (Tigerair Australia) have been equity accounted for the period from 1 July 2014 to 16 October 2014 and consolidated from 17 October 2014 until 31 December 2014

21

31-Dec-14

$m

Restated 30-Jun-141

$m

Cash and cash equivalents 1,099.7 783.8

Property, plant and equipment and intangible assets 3,450.5 3,064.7

Other assets 953.4 830.8

Total assets 5,503.6 4,679.3

Interest bearing liabilities 2,522.4 1,950.7

Unearned revenue 786.9 807.7

Other liabilities 1,075.2 872.8

Total liabilities 4,384.5 3,631.2

Total equity 1,119.1 1,048.1

Balance sheet summary

Note: 1 The Group has changed its accounting policy for heavy maintenance in the prior year and adopted AASB 9 – Financial Instruments from 1 July 2014 which has resulted in prior period restatements

22

H1 FY15

$m

Restated H1 FY141

$m

Cash flow from operations (excluding business and capital restructure and transaction costs and net finance costs) 133.5 124.7

Restructure and transaction costs (35.2) (36.4) Net finance costs (33.5) (24.7) Net cash flow from operating activities 64.8 63.6 Net cash (used in) / from investing activities (11.9) (281.8) Net cash from financing activities 234.0 527.7 Net cash inflow 286.9 309.5 Total Cash Balance at start of period 783.8 580.5 FX adjustments on cash balances 29.0 6.4

Total Cash Balance at end of period 1,099.7 896.4

Unrestricted Cash Balance at end of period 838.8 665.4

Cash flow summary

Note: 1 The Group has changed its accounting policy for heavy maintenance in the prior year and adopted AASB 9 – Financial Instruments from 1 July 2014 which has resulted in prior period restatements

23

Hedging summary – fuel Brent

Remainder of FY151

Operating requirements hedged 81%

Participation in favourable price movements 25%

Worst case hedged rate (inclusive of option premium) AUD 110.34/ bbl2

Hedging policy

Note: 1 Figures as at 10 February 2015; 2 As at 10 February 2015, spot Brent price is AUD 73/ bbl (unhedged physical basis) and spot AUD:USD rate is 0.7771

Hedging summary – forex Non-fuel currency

Remainder of FY151

Operating requirements hedged 90%

Participation in favourable price movements 18%

Average AUD:USD hedged rate (inclusive of option premium) 0.902

24

Actual

30 Jun 2014 Actual

31 Dec 2014

B737-700/800 74 76

E190 18 18

A330 7 6

B777 5 5

ATR72-500/600 13 14

Mainline fleet 117 119

F50 8 8

F100 10 12

A320 (VARA and Tigerair) 15 15

Total Virgin Australia Group fleet 150 154

Virgin Australia Group fleet

26

Disclaimer, definitions and ASIC guidance

Disclaimer The following non-IFRS information has not been audited or reviewed by KPMG: Restructuring and transaction Costs, Underlying profit/(loss) before tax excluding one-off items, equity accounted losses and hedging and financial instruments (Underlying Profit/(Loss)), Segment EBIT, Yield, Underlying CASK (CASK) and Hedging and Financial Instruments. This presentation has not been audited or reviewed by KPMG; however, IFRS data has been derived from the Virgin Australia Holdings Limited Interim Financial Report for the half-year ended 31 December 2014 that have been reviewed by KPMG. Definitions Restructuring and transaction Costs: is a non-statutory measure that includes the following items outlined in Note 6 of the Virgin Australia Holdings Limited Interim Financial Report for the half-year ended 31 December 2014: Business and capital restructure and transaction costs ($35.6m) and net loss on disposal of assets ($7.3m). For the half-year ended 31 December 2013, this item included Business and capital restructure and transaction costs ($36.7m), Accelerated amortisation resulting from capital restructure ($12.3m), interest rate swap terminations associated with capital restructure (loss of $8.4m) and Accelerated depreciation due to changes in useful life of assets and net loss on disposal of assets ($0.9m). Underlying profit/(loss) before tax excluding one-off items, equity accounted losses and hedging and financial instruments (Underlying Profit/(Loss)): is a non-statutory measure that represents statutory loss before tax excluding the impact of restructuring and transaction costs (as defined above), share of equity accounted losses from Tiger Airways Australia Pty Limited and Virgin Samoa Limited and the impact of hedging and financial instruments (as defined on slide 27). This is a non-statutory measure used by Management and VAH’s Board as a measure to assess the financial performance of VAH. The Group has changed its accounting policy for heavy maintenance in the prior year and adopted AASB 9 – Financial Instruments from 1 July 2014 which has resulted in prior period restatements. Segment EBIT: is a non-statutory measure per Note 6 of the Virgin Australia Holdings Limited Interim Financial Report for the half-year ended 31 December 2014. It is used by Management and VAH’s Board as a measure to assess the financial performance of VAH and individual segments. The Group has changed its accounting policy for heavy maintenance in the prior year and adopted AASB 9 – Financial Instruments from 1 July 2014 which has resulted in prior period restatements.

27

Disclaimer, definitions and ASIC guidance (continued)

Definitions (continued) Yield: is a non-statutory measure of revenue divided by Revenue Passenger Kilometres. Revenue excludes charter, freight and loyalty related revenue. Underlying CASK (CASK): is a non-statutory measure derived from consolidated segment revenue less consolidated segment EBIT excluding time value movement and unrealised ineffectiveness, charter business and non-Regular Passenger Transport costs divided by Available Seat Kilometres of the Regular Passenger Transport business. Financial leverage: is a non-statutory measure and is defined as the ratio of adjusted net debt (gross debt less cash plus 7x annual aircraft operating leases) to underlying annual Earnings Before Interest, Tax, Depreciation, Amortisation and aircraft Rental costs (EBITDAR). Hedging and Financial Instruments: is a non-statutory measure that includes the following items outlined in Note 6 of the Virgin Australia Holdings Limited Interim Financial Report for the half-year ended 31 December 2014: unrealised ineffectiveness on cash flow hedges and non-designated derivatives (loss of $9.8m) and time value movements on cash flow hedges (loss of $3.2m). For the half-year ended 31 December 2013, this item includes unrealised ineffectiveness on cash flow hedges and non-designated derivatives (gain of $33.8m) and time value movements on cash flow hedges (loss of $15.3m). The Group has early adopted AASB 9 Financial Instruments from 1 July 2014 which has resulted in prior period restatements. ASIC guidance In December 2011 ASIC issued Regulatory Guide 230. In order to comply with this Guide, Virgin Australia Limited is required to make a clear statement about whether information disclosed in documents other than the Virgin Australia Holdings Limited Interim Financial Report for the half-year ended 31 December 2014 has been audited or reviewed in accordance with Australian Auditing Standards. The following non-IFRS information has not been audited or reviewed by KPMG: Restructuring and transaction Costs, Underlying profit/(loss) before tax excluding one-off items, equity accounted losses and hedging and financial instruments (Underlying Profit/(Loss)), Segment EBIT, Yield, Underlying CASK (CASK) and Hedging and Financial Instruments. This presentation has not been audited or reviewed by KPMG; however, IFRS data has been derived from the Virgin Australia Holdings Limited Interim Financial Report for the half-year ended 31 December 2014 that have been reviewed by KPMG.