Vir­gin Blue bot­toms out due to nat­u­ral dis­as­ters, fuel costs

Townsville Bulletin - - Investor -

NAT­U­RAL dis­as­ters and spi­ralling fuel costs have forced Vir­gin Blue Hold­ings Ltd to is­sue a fourth earn­ings down­grade in 12 months, leav­ing the air­line’s share price at a near seven-month low.

The air­line group – com­pris­ing Vir­gin Blue, Poly­ne­sian Blue, Pa­cific Blue and V Aus­tralia – said yes­ter­day it ex­pected to post a be­fore tax loss for 2010/ 11 in a range be­tween $ 30 mil­lion to $ 80 mil­lion.

‘‘ This as­sumes no fur­ther sig­nif­i­cant in­crease in fuel prices and no ma­te­rial de­te­ri­o­ra­tion in the trad­ing en­vi­ron­ment,’’ Vir­gin Blue said.

If the re­sult prints in line with ex­pec­ta­tions, it would be well be­low the $ 33.4 mil­lion pre-tax profit in 2009/ 10.

In­vestors ham­mered Vir­gin Blue in re­sponse, with the stock slump­ing 7.58 per cent to be at the low­est level since Au­gust 26, 2010 at 30.5 cents.

C h i e f e x e c u t i v e J o h n Borghetti said plans to wean the air­line off the heavy re­liance on the leisure mar­ket and seek a larger share of cor­po­rate and busi­ness trav­ellers were un­changed.

O n t h e c o n t r a r y , M r Borghetti said cur­rent cir­cum­stances left him even more cer­tain it was the cor­rect ap­proach.

‘‘ We are more con­fi­dent than ever that our strat­egy is the right one,’’ Mr Borghetti said.

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