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Virgin Australia confident of tripling air cargo revenue by mid-2017

VIRGIN Australia remains confident of achieving its target of generating A$150 million (US$107.325 million) in annual revenue from cargo by mid-2017, despite sales falling in the first half as the business was restructured.

Virgin launched its cargo division on July 1, 2015, after its long-time freight manager Toll Holdings said rival Australian airline Qantas would carry its freight, which had been flown in Virgin bellyholds since 2007, reported the Sydney Morning Herald.

"We knew we were going to take a hit in the short term," said Virgin Australia manager John Borghetti, recalling the decision to manage cargo itself rather than having Toll do it.

"We were confident in the long term we'd be further ahead. I am still confident of our ability to do A$150 million (by the end of the 2017 financial year)."

The airline set a target in August 2014 of tripling annual freight revenue to A$150 million to A$200 million by the end of the 2017 financial year.

Virgin did not break out freight revenue in its half-year results, but Mr Borghetti said it had picked up 80 to 90 freight accounts since launching the business.

The airline has signed up third-party providers like Menzies Aviation, dnata and Aerocare to provide ground-handling services that were once performed by Toll.

Last week, the airline signed a heads of agreement with TNT to finalise a five-year deal to take effect from July. Mr Borghetti said if the deal was finalised, it would be exclusive and would take business that was with Qantas now.