Virgin Blue bottoms out due to natural disasters, fuel costs
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.