Virgin Australia Holdings Limited

Virgin Australia Holdings Limited (Formerly Virgin Blue Holdings Limited) APPENDIX 4D HALF YEAR REPORT HALF YEAR ENDED 31 DECEMBER 2011 VIRGIN AUSTRALIA HOLDINGS LIMITED ACN 100 686 226

Virgin Australia Holdings Limited Appendix 4D Half Year Report Half year ended 31 December 2011 1. Details of the reporting period and the prior corresponding period Reporting Period (reviewed): 1 July 2011 to 31 December 2011 Previous Corresponding Period (reviewed): 1 July 2010 to 31 December 2010 2. Results for announcement to the market $m Revenue from ordinary activities Up 18% to 2,006.4 Profit from ordinary activities after tax attributable to members Up 118% to 51.8 Net profit for the period attributable to members Up 118% to 51.8 3. The net profit for the period attributable to members is made up of: Half year ended Half year ended 31 December 2011 31 December 2010 $m $m Profit before tax expense, net finance costs, ineffective cash flow hedges and non designated derivatives 107.7 78.5 Ineffective cash flow hedges and non designated derivatives (8.3) (16.5) Net finance costs (22.1) (25.2) Tax expense (25.5) (13.0) Net profit after tax 51.8 23.8 4. Dividends (cents per share) 31 December 2011 Amount per security Franked amount per security Final Dividend Nil Nil Interim Dividend Nil Nil No dividends were declared or paid by the Company during the half year period ended 31 December 2011. 5. Net tangible assets Half year ended 31 December 2011 $ Half year ended 31 December 2010 $ Net tangible asset backing per ordinary share* 0.41 0.41 * This has been calculated by dividing the net assets attributable to equity holders less intangible assets, calculated on total issued shares of 2,210,197,600 (previous corresponding period: 2,210,197,600). 1

Virgin Australia Holdings Limited Appendix 4D Half Year Report Half year ended 31 December 2011 6. Control gained or lost over entities during the period, and those having material effect Name of entities where control was gained in the period The following entities were incorporated during the period: Entity Date of incorporation 737 2012 No.1 Pty Ltd 10 November 2011 737 2012 No.2 Pty Ltd 11 November 2011 Name of entities where control was lost in the period No entities were disposed of due to loss of control during the period. 7. Details of associates and joint venture entities Percentage of ownership interest held: Contribution to net profit: 31 December 2011 31 December 2010 31 December 2011 31 December 2010 Entity % % $m $m Virgin Samoa Limited (formerly known as Polynesian Blue Limited) 49 49 0.3 0.7 8. Commentary on results A commentary on the results for the half year period ended 31 December 2011 is contained in the accompanying Interim Financial Report and the Media Release. The Interim Financial Report includes financial statements for the half year ended 31 December 2011 and half year ended 31 December 2010. 9. Statement if financial report is subject to review dispute or qualification The financial report has been subject to review, and is not subject to dispute or qualifications. 2

Virgin Australia Holdings Limited (Formerly Virgin Blue Holdings Limited) INTERIM FINANCIAL REPORT HALF YEAR ENDED 31 DECEMBER 2011 VIRGIN AUSTRALIA HOLDINGS LIMITED ACN 100 686 226

Contents Corporate directory 2 Directors report 3 Auditor s independence declaration 5 Consolidated income statement 6 Consolidated statement of comprehensive income 7 Consolidated statement of financial position 8 Consolidated statement of changes in equity 9 Consolidated statement of cash flows 11 Condensed notes to the consolidated financial statements 12 1. Reporting entity 12 2. Basis of preparation 12 3. Significant accounting policies 12 4. Seasonality 13 5. Financial risk management 13 6. Operating segments 13 7. Decreases in value of property, plant and equipment and intangible assets 15 8. Property, plant and equipment 15 9. Interest bearing liabilities 15 10. Share capital 16 11. Intangible assets 16 12. Dividends paid 16 13. Commitments 16 14. Share based payments 17 15. Contingent liabilities and contingent assets 18 16. Related parties 18 17. Restatement of prior period comparative information 18 18. Subsequent events 18 Directors declaration 20 Independent auditor s review report 21 1

Corporate directory Company secretary Mr Adam Thatcher Principal administrative and registered office Virgin Australia Holdings Limited 56 Edmondstone Road Bowen Hills, QLD 4006 Australia Telephone: (07) 3295 3000 Share registry Computershare Investor Services Pty Limited 117 Victoria Street West End, QLD 4101 Telephone: 1300 850 505 (within Australia) or +61 3 9415 4000 (outside Australia) Securities exchange Virgin Australia Holdings Limited is listed on the Australian Securities Exchange. Brisbane. The Home Exchange is Other information Virgin Australia Holdings Limited, incorporated and domiciled in Australia, is a publicly listed company limited by shares. 2

Directors report The directors present their report together with the consolidated financial report of Virgin Australia Holdings Limited (formerly Virgin Blue Holdings Limited) for the half year period ended 31 December 2011 and the review report thereon. Directors The directors of the Company at any time during or since the end of the period are: Name Position Period of directorship Mr Neil Chatfield Non Executive Chairman Appointed 11 May 2006. Appointed Company Chairman 14 June 2007. Mr John Borghetti Managing Director Chief Executive Officer Appointed 8 May 2010. Mr David Baxby Non Executive Director Appointed 30 September 2004. Mr Joshua Bayliss Non Executive Director Appointed 6 April 2011. Ms Samantha Mostyn Independent Non Executive Director Appointed 1 September 2010. Mr Robert Thomas Independent Non Executive Director Appointed 8 September 2006. The Hon. Mark Vaile Independent Non Executive Director Appointed 22 September 2008. Review of operations Net profit after income tax attributable to the owners increased 118 per cent from $23.8 million in the prior corresponding half year ended 31 December 2010 to $51.8 million for the half year 31 December 2011. Net operating income increased 18 per cent from $1,695.0 million in the prior corresponding half year ended 31 December 2010 to $2,006.4 million for the half year ended 31 December 2011. Total operating expenses increased 17 per cent from $1,616.5 million in the prior corresponding half year ended 31 December 2010 to $1,898.7 million for the half year ended 31 December 2011. 3

Directors report (continued) Lead auditor s independence declaration under section 307C of the Corporations Act 2001 The lead auditor s independence declaration is set out on page 5, and forms part of the Directors report for the half year ended 31 December 2011. Rounding off The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the interim financial report have been rounded off to the nearest one hundred thousand dollars, unless otherwise stated. Signed in accordance with a resolution of the directors: John Borghetti Director Brisbane 23 February 2012 Neil Chatfield Director Brisbane 23 February 2012 4

Lead auditor s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Virgin Australia Holdings Limited I declare that, to the best of my knowledge and belief, in relation to the review for the half year ended 31 December 2011 there have been: (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and (ii) no contraventions of any applicable code of professional conduct in relation to the review. KPMG A W Young Partner Brisbane 23 February 2012 5 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Liability limited by a scheme approved under Professional Standards Legislation

Consolidated income statement Half year to Half year to 31 December 2011 31 December 2010 $m $m Note Revenue and income Revenue 1,997.4 1,692.7 Other income 2.8 1.6 Foreign exchange gains 5.9 Share of net profits of associate accounted for using the equity method 0.3 0.7 2,006.4 1,695.0 Operating expenditure Aircraft operating costs (97.6) (85.6) Airport charges, navigation and station operations (334.6) (320.2) Contract and other maintenance costs (95.5) (80.3) Commissions and other marketing and reservations costs (142.9) (125.9) Fuel and oil (531.6) (433.4) Labour and staff related costs (429.2) (364.0) Other expenses from ordinary activities 7 (141.7) (81.0) Depreciation and amortisation (125.6) (110.3) Foreign exchange losses (15.8) Total operating expenses (1,898.7) (1,616.5) Profit before tax expense, net finance costs, ineffective cash flow hedges and non designated derivatives 107.7 78.5 Ineffective cash flow hedges and non designated derivatives (8.3) (16.5) Profit before related income tax expense and net finance costs 99.4 62.0 Finance costs (40.0) (44.0) Finance income 17.9 18.8 Net finance costs (22.1) (25.2) Profit before income tax expense 77.3 36.8 Income tax expense (25.5) (13.0) Net profit for the half year attributable to the owners of Virgin Australia Holdings Limited 51.8 23.8 Earnings per share for profit attributable to the ordinary equity holders of the Company: Basic earnings per share 2.3 cents 1.1 cents Diluted earnings per share 2.3 cents 1.1 cents The above consolidated income statement is to be read in conjunction with the accompanying notes to the consolidated financial statements. 6

Consolidated statement of comprehensive income Half year to Half year to 31 December 2011 31 December 2010 $m $m Profit for the period 51.8 23.8 Other comprehensive income Exchange differences on translation of foreign operations (26.9) 19.9 Effective portion of changes in fair value of cash flow hedges (1.4) 31.3 Net change in fair value of cash flow hedges transferred to profit or loss 23.5 (66.7) Net change in fair value of cash flow hedges transferred to initial carrying value of hedged item (4.3) Income tax on other comprehensive income (6.7) 11.9 Other comprehensive income for the period net of tax (11.5) (7.9) Total comprehensive income for the period attributable to owners of Virgin Australia Holdings Limited 40.3 15.9 The above consolidated statement of comprehensive income is to be read in conjunction with the accompanying notes to the consolidated financial statements. 7

Consolidated statement of financial position As at 31 December 2011 As at As at 31 December 2011 30 June 2011 Note $m $m Current assets Cash and cash equivalents 851.4 731.3 Trade and other receivables 139.4 185.8 Inventories 9.0 5.1 Derivative financial instruments 4.8 7.4 Other financial assets 4.0 5.5 Other current assets 2.4 0.8 Total current assets 1,011.0 935.9 Non current assets Derivative financial instruments 1.1 Other financial assets 52.6 45.8 Investments accounted for using the equity method 7.8 7.5 Property, plant and equipment 8 2,845.9 2,754.9 Intangible assets 69.3 69.1 Deferred tax assets 5.0 8.0 Other non current assets 17.1 6.4 Total non current assets 2,998.8 2,891.7 Total assets 4,009.8 3,827.6 Current liabilities Trade and other payables 434.2 395.9 Interest bearing liabilities 9 274.2 227.3 Provisions 105.5 98.0 Derivative financial instruments 7.7 45.6 Unearned revenue 629.3 686.2 Total current liabilities 1,450.9 1,453.0 Non current liabilities Trade and other payables 3.3 3.8 Interest bearing liabilities 9 1,509.7 1,412.6 Provisions 28.7 24.6 Derivative financial instruments 13.5 4.1 Deferred tax liabilities 34.3 3.2 Total non current liabilities 1,589.5 1,448.3 Total liabilities 3,040.4 2,901.3 Net assets 969.4 926.3 Equity Share capital 10 633.3 633.3 Reserves 64.1 72.8 Retained profits 272.0 220.2 Total equity 969.4 926.3 The above consolidated statement of financial position is to be read in conjunction with the accompanying notes to the consolidated financial statements. 8

Consolidated statement of changes in equity Attributable to owners of the Company Share capital Foreign currency translation reserve Hedging reserve Sharebased payments reserve Retained earnings Total equity $m $m $m $m $m $m Note Restated Restated Restated Balance at 1 July 2010 632.5 13.2 (15.7) a 15.3 288.0 a 933.3 a Total comprehensive income for the period Profit for the period 23.8 23.8 Other comprehensive income* Foreign currency translation differences 19.9 19.9 Effective portion of changes in fair value of cash flow hedges 21.9 21.9 Net change in fair value of cash flow hedges transferred to profit or loss (46.7) (46.7) Net change in fair value of cash flow hedges transferred to initial carrying value of hedged item (3.0) (3.0) Total other comprehensive income 19.9 (27.8) (7.9) Total comprehensive income for the period 19.9 (27.8) 23.8 15.9 Transactions with owners, recorded directly in equity* Issue of ordinary shares 10 0.8 0.8 Share based payment transactions 14 0.8 0.8 Total transactions with owners 0.8 0.8 1.6 Balance at 31 December 2010 633.3 33.1 (43.5) a 16.1 311.8 a 950.8 a a Refer to note 17 * Amounts recognised are disclosed net of income tax (where applicable) The above consolidated statement of changes in equity is to be read in conjunction with the accompanying notes to the consolidated financial statements. 9

Consolidated statement of changes in equity (continued) Share capital Attributable to owners of the Company Foreign currency translation reserve Hedging reserve Sharebased payments reserve Retained earnings Total equity Note $m $m $m $m $m $m Balance at 1 July 2011 633.3 90.9 (33.5) 15.4 220.2 926.3 Total comprehensive income for the period Profit for the period 51.8 51.8 Other comprehensive income* Foreign currency translation differences (26.9) (26.9) Effective portion of changes in fair value of cash flow hedges (1.0) (1.0) Net change in fair value of cash flow hedges transferred to profit or loss 16.4 16.4 Net change in fair value of cash flow hedges transferred to initial carrying value of hedged item Total other comprehensive income (26.9) 15.4 (11.5) Total comprehensive income for the period (26.9) 15.4 51.8 40.3 Transactions with owners, recorded directly in equity* Issue of ordinary shares 10 Share based payment transactions 14 2.8 2.8 Total transactions with owners 2.8 2.8 Balance at 31 December 2011 633.3 64.0 (18.1) 18.2 272.0 969.4 *Amounts recognised are disclosed net of income tax (where applicable) The above consolidated statement of changes in equity is to be read in conjunction with the accompanying notes to the consolidated financial statements. 10

Consolidated statement of cash flows Half year to Half year to 31 December 2011 31 December 2010 Note $m $m Cash flows from operating activities Cash receipts in the course of operations 2,187.3 1,856.5 Cash payments in the course of operations (1,911.0) (1,671.3) Finance costs paid (44.0) (49.1) Income taxes paid (0.1) Net cash inflow from operating activities 232.3 136.0 Cash flows from investing activities Interest received 17.9 18.8 Payments for other deposits (1.8) (6.7) Payments for intangible assets 11 (14.8) (1.2) Proceeds on disposal of property, plant and equipment 8 183.8 Payments for property, plant and equipment 8 (392.0) (292.2) Net cash outflow from investing activities (206.9) (281.3) Cash flows from financing activities Proceeds from borrowings 9 220.0 263.4 Repayment of borrowings 9 (113.8) (154.2) Payment of finance lease liabilities 9 (5.2) Net cash inflow from financing activities 101.0 109.2 Net movement in cash and cash equivalents 126.4 (36.1) Cash and cash equivalents at the beginning of the 731.3 814.7 financial period Effects of exchange rate changes on cash and cash equivalents (6.3) (6.3) Cash and cash equivalents at the end of the financial period 851.4 772.3 The above consolidated statement of cash flows is to be read in conjunction with the accompanying notes to the consolidated financial statements. 11

Condensed notes to the consolidated financial statements 1. Reporting entity Virgin Australia Holdings Limited (the Company ) (formerly Virgin Blue Holdings Limited) is a company domiciled in Australia. The consolidated interim financial report of the Company as at and for the half year ended 31 December 2011 comprises; the Company and its subsidiaries (together referred to as the Group ) and the Group s interest in its associate. The Group is primarily involved in the airline industry. The consolidated annual financial report of the Group as at and for the year ended 30 June 2011 is available upon request from the Company s registered office at 56 Edmondstone Road, Bowen Hills QLD 4006, or at www.virginaustralia.com.au. 2. Basis of Preparation a. Statement of compliance The consolidated interim financial report is a general purpose financial report which has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001, and with IAS 34 Interim Financial Reporting The consolidated interim financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the consolidated annual financial report of the Group as at and for the year ended 30 June 2011. The consolidated interim financial report was approved by the Board of Directors on 23 February 2012. The Group is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with the Class Order, amounts in the consolidated interim financial report have been rounded off to the nearest one hundred thousand dollars, unless otherwise stated. The Group s current liabilities exceed its current assets for the half year ended 31 December 2011. The financial report has been prepared on a going concern basis, which contemplates the continuity of normal operations, as the Group is currently trading profitably and has a cash and cash equivalents balance of $851.4 million. b. Estimates The preparation of the consolidated interim financial report requires management to make judgements, estimates, and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. In preparing this consolidated interim financial report, the significant judgements made by management in applying the Group s accounting policies and key sources of estimation uncertainty were the same as those that applied to the consolidated annual financial report as at and for the year ended 30 June 2011. 3. Significant accounting policies The accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the Group in its consolidated annual financial report as at and for the year ended 30 June 2011. 12

Condensed notes to the consolidated financial statements (continued) 4. Seasonality As is normal in the airline industry, performance and capacity is very seasonal throughout a 12 month period. Therefore, the first half year period may not be representative of the second half year period of any given year. 5. Financial risk management The Group s financial risk management objectives and policies are consistent with that disclosed in the consolidated interim financial report as at and for the year ended 30 June 2011. 6. Operating segments During the 2011 financial year, the Board commenced a review of internal management reports on the basis of Domestic operations and International operations. These segments differ from those reported in the 2010 financial year and the half year ended 31 December 2010. Previously the Group s reportable segments were Short haul operations and Long haul operations. The following summary describes the operations in each of the Group s reportable segments: Domestic operations Operations using the fleet of Boeing 737 aircraft, Airbus A330 aircraft, ATR aircraft, and Embraer 170 and 190 aircraft. This comprises Australian domestic flying. The Group s Velocity Program is also reported within domestic operations. International operations Operations using a mix of Boeing 777 aircraft and Boeing 737 aircraft. This comprises Trans Pacific, Abu Dhabi, Trans Tasman and Pacific Island flying. Information regarding the results of each operating segment is included below. Performance is measured based on EBIT (earnings before interest, decreases in value of property plant and equipment and intangibles as outlined in note 7, ineffective cash flow hedges and non designated derivatives and income tax) as included in the internal management reports that are reviewed by the Board. EBIT is used to measure performance as management believes such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within the airline industry. Inter segment pricing is determined on an arm s length basis or a cost plus margin basis, depending on the nature of the revenue and the financial impact on the segment receiving the revenue. Comparative segment information has been re presented in conformity with the requirements of AASB 8 Operating Segments. 13

Condensed notes to the consolidated financial statements (continued) 6. Operating segments (continued) For the half year ended 31 December Domestic International Eliminations Consolidated 2011 $m $m $m $m Sales and other income External revenues and other income 1,454.4 551.7 2,006.1 Inter segment revenues 28.4 (28.4) Segment revenue 1,482.8 551.7 (28.4) 2,006.1 Share of net profit of associate 0.3 0.3 Segment EBIT 92.4 35.1 127.5 Decreases in value of property, plant and equipment and intangibles* (19.8) 107.7 Ineffective cash flow hedges and non designated derivatives (8.3) Net financing costs (22.1) Profit before related income tax expense 77.3 Income tax expense (25.5) Profit for the period 51.8 *Refer to note 7 99.4 Domestic International Eliminations Consolidated 2010 $m $m $m $m Sales and other income External revenues and other income 1,206.9 487.4 1,694.3 Inter segment revenues 45.2 (45.2) Segment revenue 1,252.1 487.4 (45.2) 1,694.3 Share of net profit of associate 0.7 0.7 Segment EBIT 53.2 25.3 78.5 Decreases in value of property, plant and equipment and intangibles* Ineffective cash flow hedges and non designated derivatives (16.5) Net financing costs (25.2) Profit before related income tax expense 36.8 Income tax expense 78.5 62.0 (13.0) Profit for the period 23.8 *Refer to note 7 14

Condensed notes to the consolidated financial statements (continued) 7. Decreases in value of property, plant and equipment and intangible assets During the half year ended 31 December 2011 the Group recognised write downs of both aeronautical assets ($8.5 million) and intangible assets ($0.4 million). Changes in the airline s use of certain assets resulted in asset devaluations and subsequent accelerated depreciation included in its total half year depreciation ($4.2 million). In addition, the Group recognised a loss on disposal on aircraft ($2.6 million) and an impairment loss ($4.1 million) on aeronautical assets. These decreases are included in other expenses from ordinary activities in the Consolidated Income Statement, with the exception of the accelerated depreciation which is included in depreciation expense. There were no asset write downs or losses on disposal recognised during the half year ended 31 December 2010. 8. Property, plant and equipment During the half year ended 31 December 2011, the Group acquired assets with a cost of $392.0 million (2010: $292.2 million) primarily comprising aircraft and aeronautic related assets. The Group also realised proceeds of $183.8 million (2010: nil) during the period. These were derived from the sale and leaseback of aircraft and aeronautical assets. 9. Interest bearing liabilities As at As at 31 December 2011 30 June 2011 Current $m $m Loans (aeronautic finance facilities) secured 269.4 227.3 Finance lease liabilities 4.8 274.2 227.3 Non current Loans (aeronautic finance facilities) secured 1,449.2 1,412.6 Finance lease liabilities 60.5 1,509.7 1,412.6 During the half year ended 31 December 2011, the Group entered into additional interest bearing liabilities to finance the purchase of additional aeronautical assets. The facilities are secured over assets purchased and issued capital of VB LH 2010 11 No.2 Pty Ltd and 737 2012 No.2 Pty Ltd. Proceeds from borrowings for the half year ended 31 December 2011 totalled $220.0 million (2010: $263.4 million), with repayment of borrowings totalling $113.8 million (2010: $154.2 million). Payment of finance lease liabilities for the half year ended 31 December 2011 relate to aeronautical related assets, totalling $5.2 million (2010: $nil). 15

Condensed notes to the consolidated financial statements (continued) 10. Share capital On 13 December 2010, the Group issued 1.1 million ordinary shares in accordance with the terms of the Medium Term Incentive Plan. The terms of the Plan are disclosed in the consolidated annual financial report of the Group for the year ended 30 June 2011. The number of ordinary shares issued at 31 December 2011 was 2,190.0 million (30 June 2011: 2,190.0 million). 11. Intangible assets Payments for intangible assets consist predominantly of internally developed software capitalised during the half year ended 31 December 2011. Changes in estimates During the half year period the company resolved to introduce a new Sabre reservations system. The new solution will replace the existing Navitaire and Amadeus reservation systems. This resulted in a decrease in the estimate of the expected useful lives of these systems. The effect of this change increases depreciation expense in the current half year period by $3.3 million and current full year period by $16.5 million. 12. Dividends paid No dividends were declared and paid by the Company during the half year ended 31 December 2011 (2010: nil). No dividends have been declared subsequent to 31 December 2011. 13. Commitments Commitments for the acquisition of property, plant and equipment (primarily aircraft and aeronautic assets) contracted for at the reporting date but not recognised as liabilities, payable: As at As at 31 December 2011 30 June 2011 $m $m Within 1 year 405.0 489.9 One year or later and no later than five years 1,846.9 1,573.3 Later than five years 136.3 474.1 2,388.2 2,537.3 16

Condensed notes to the consolidated financial statements (continued) 14. Share based payments During the half year ended 31 December 2011 the Group issued executive options and established two additional employee share plans. a. Executive Options 413,614 options were granted on 11 October 2011 with the same performance hurdles as SEOP 12 as disclosed in the 30 June 2011 Annual Report. The options are exercisable during the period commencing on the date on which the 2013 annual results are announced and concluding on 30 June 2014. If the zero price options do not vest they will lapse on 30 June 2014. b. Key Employee Performance Plan (KEPP) 2011 On 24 October 2011, 580,152 performance rights were issued under the Key Employee Performance Plan ( KEPP ) 2011. Details Directors may grant performance rights to eligible full time or permanent part time employees of the Group, other than a non executive director of a member of the Group. The Company has appointed CPU Share Plans Pty Limited as Trustee to acquire and hold shares under the KEPP. The Trustee will transfer shares held by it to a participating employee when the vesting conditions in relation to a performance right have been satisfied or have been waived by the Board. The Company provides all monies required by the trustee to acquire shares for the purposes of the KEPP, including costs and duties. Restrictions A participating employee is not entitled to any income or other rights (including voting rights) derived from any shares acquired by the Trustee under the KEPP unless and until the shares are transferred to the employee, following satisfaction of any vesting conditions. The vesting conditions require employees to hold and not sell any of their initial purchase of shares and to remain an employee throughout the period. c. Employee Share Grant 2012 Details Employees of the Virgin Australia group of airlines (excluding the Group Executive Team, Senior Management Team and Managers) have been offered 1,000 performance rights in recognition of their hard work and enormous progress in implementing the Virgin Game Change program. Restrictions Employees must have been employed by the Virgin Australia group of airlines as of 28 November 2011 and remain employed up to and including 30 June 2012 ( Eligible Employees ). On 1 July 2012, the Performance Rights will vest, at which time Eligible Employees will receive 1,000 Ordinary Shares in Virgin Australia Holdings Limited ( VAH ). Other than the matters noted above, there were no material changes in share based payments since 30 June 2011. For details on share based payments in place, refer to 30 June 2011 annual financial report. 17

Condensed notes to the consolidated financial statements (continued) 15. Contingent liabilities and contingent assets There were no material changes in contingent liabilities or contingent assets since 30 June 2011. 16. Related parties Arrangements with related parties continue to be in place. For details on these arrangements, refer to the 30 June 2011 annual financial report. 17. Restatement of prior period comparative information As discussed in the 30 June 2011 annual financial report, there was a restatement of the valuation of the USD denominated hedge reserve at 1 July 2009 due to a change in the translation of hedge balances within the hedge reserve. The impact of the change in valuation of the hedge reserve was corrected by restating the comparative line items within equity that were affected as set out below: As previously stated $m Adjustment $m Restated $m Hedge reserve 1 July 2009 (96.5) 16.6 (79.9) Hedge reserve 30 June 2010 / 1 July 2010 (32.3) 16.6 (15.7) Hedge reserve 31 December 2010 (60.1) 16.6 (43.5) Retained earnings 1 July 2009 283.3 (16.6) 266.7 Retained earnings 30 June 2010 / 1 July 2010 304.6 (16.6) 288.0 Retained earnings 31 December 2010 328.4 (16.6) 311.8 There was no material impact on the profit and loss for the half year ended 31 December 2011 and hence no impact on the basic or diluted earnings per share for that same period. 18. Subsequent events On 22 February 2012 the Board of Directors approved a proposal seeking to separate its international airline business from Virgin Australia Holdings Limited by way of an in specie dividend. Under the proposal, all of the shares in the international airline business of Virgin Australia (previously known as Pacific Blue and V Australia) will be transferred to a new holding company, Virgin Australia International Holdings Pty Ltd. It is proposed the new structure will be effected by Virgin Australia Holdings Limited distributing shares to Virgin Australia Holdings Limited shareholders on a pro rata basis, by way of in specie dividend. Under the proposal, the shares will be vested in a professional corporate trustee to hold beneficially for Virgin Australia Holdings Limited shareholders in accordance with the terms of a trust deed. 18

Condensed notes to the consolidated financial statements (continued) 18. Subsequent events (continued) The proposed new structure is to be effected by the in specie dividend. That dividend will only be determined and distributed by Virgin Australia Holdings Limited if the following conditions are satisfied or waived by Virgin Australia Holdings Limited: no legal action exists which would prohibit the implementation of the proposed new structure, including no event or occurrence which would have a material adverse effect on the ability of the international entities to continue to operate their business; and where required, the consent of key stakeholders. The targeted date to determine the dividend is 16 March 2012 with implementation by the end of March 2012. It is not anticipated that this transaction will have any financial impact on the current financial results or current position of Virgin Australia Holdings Limited. 19

Directors declaration In the opinion of the directors of Virgin Australia Holdings Limited ( the Company ): (a) the financial statements and notes, set out on pages 6 to 19, are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of the Group s financial position as at 31 December 2011 and of its performance, as represented by the results of its operations and its cashflows, for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the directors: John Borghetti Director Brisbane 23 February 2012 Neil Chatfield Director Brisbane 23 February 2012 20

Independent auditor s review report to the members of Virgin Australia Holdings Limited We have reviewed the accompanying interim financial report of Virgin Australia Holdings Limited (formerly Virgin Blue Holdings Limited), which comprises the consolidated statement of financial position as at 31 December 2011, consolidated income statement and consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the interim period ended on that date, notes 1 to 18 comprising a summary of significant accounting policies and other explanatory information and the directors declaration of the Group comprising the company and the entities it controlled at the half year s end or from time to time during the interim period. Directors responsibility for the interim financial report The directors of the company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the interim financial report that is free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group s financial position as at 31 December 2011 and its performance for the interim period ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Virgin Australia Holdings Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. 21 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International, a Swiss cooperative. Liability limited by a scheme approved under Professional Standards Legislation

Independent auditor s review report to the members of Virgin Australia Holdings Limited (continued) Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Virgin Australia Holdings Limited is not in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group s financial position as at 31 December 2011 and of its performance for the interim period ended on that date; and (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. KPMG A W Young Partner Brisbane 23 February 2012 22