Toll Holdings' airport services offshoot has ditched a large contract with Virgin Australia after sustaining "significant losses" on the deal that involved baggage handling and passenger check-in services.
The end of the contract raises the possibility of job losses at Toll Dnata, which has a 1200-strong workforce in Australia. The airport services firm is a joint venture between Toll Holdings and Dubai's Dnata Group.
Toll Holdings has revealed that the airport services provider sank into the red in the year to June due largely to "significant losses" on the Virgin contract. The company said it expected a turnaround in Toll Dnata's performance in the new financial year once the Virgin contract ends next month.
The Virgin contract involved Toll Dnata carrying out baggage handling, check-in and other customer-service roles for Virgin's international flights, including short-haul services to New Zealand and the Pacific Islands. The work was for Virgin at Sydney, Melbourne and Brisbane airports.
Toll Dnata also incurred costs this year from the construction of new facilities in Sydney and Melbourne.
But it recently won a major deal with Air New Zealand to provide passenger and ramp-handling services. Air New Zealand is Virgin's largest shareholder.
Toll Holdings declined to comment further.