Monday, March 28, 2011

Virgin Blue warns of full-year loss on rising jet fuel prices


VIRGIN Blue Holdings has warned of subdued full-year profit as higher jet fuel prices, pushed up by turmoil in the Middle East and an earthquake in New Zealand hit demand for travel.

The airline group, comprising Virgin Blue, Polynesian Blue, Pacific Blue and V Australia, said today it expected to post a full-year before tax loss of between $30 million to $80m.

That would compare to last year's statutory net profit before tax figure of $34.3m and this year's first-half figure of $37m.

In early trade, Virgin Blue shares fell 2.5 cents, or 7.58 per cent, at 30.5c, the lowest since August 26, 2010.

At the airline's 2010-11 first half results presentation in February, Virgin Blue chief executive John Borghetti said the second half would be "challenging", but declined to issue specific earnings guidance, saying it was too early to do so.


Australia's second biggest carrier said jet fuel costs have risen even further since it released first half results on February 23.

The extra rise in the last six weeks has added an extra $50m to its second-half fuel costs. The Christchurch earthquake is expected to have a $15m impact, it said.

"We have witnessed an unprecedented number of significant events in an extraordinarily short period of time, including natural disasters and a sharp spike in fuel prices," chief executive John Borghetti said in a statement.

"These events have severely impacted consumer confidence, resulting in a slower than usual recovery in tourism," he said.

Mr Borghetti said the market conditions validated the airline's plan to wean itself off the heavy reliance on the leisure market and look for a larger share of corporate and business travellers.






By

NEHA JAIN

      

   

     



            

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