Dow Jones
Tuesday December 16, 5:56 PM AEDT
INTERVIEW/Virgin Blue: Confirms Asia Carrier Talks
By Lilly Vitorovich
BRISBANE (Dow Jones)--Australian discount airline Virgin Blue Holdings Ltd. Tuesday vowed to protect its market share, which is nudging 30%, from rival Qantas Airways Ltd. and its offshoot Jetstar.
Virgin Blue chief executive Brett Godfrey said the company's market share has grown to around 30%, from the 28%-plus figure at the end of August which was quoted in its 178-page share offer prospectus.
"Let's just say it's around 30%," Godfrey told Dow Jones Newswires during a phone interview, adding the carrier has added more flights and routes over the past three and a half months.
The Brisbane-based airline, which was launched by U.K. entrepreneur Richard Branson in August 2000, is expected to issue a market share update in the next day or so, Godfrey added.
Virgin Blue has proved a formidable competitor to Qantas due to its low cost base, cheap airfares and the gap in the Australian market following the demise of two carriers, Ansett Australia and Impulse Airlines.
The company made a solid debut last week on the Australian Stock Exchange, listing at A$2.40 a share, compared with the IPO price of A$2.25. It was at A$2.38 in late Tuesday trade, down four cents.
Godfrey said he remains comfortable with the net profit forecast of A$150 million for the 12 months ending March 31, 2004, up 36% from a year ago. It also forecast a 52% rise in sales to A$1.39 billion in fiscal 2004 from A$914.6 million in fiscal 2003.
"I would expect to make our forecasts," he said.
Godfrey expects "deep discounting" when Qantas launches Jetstar next May, but will fight to keep Virgin Blue's leading role as Australia's low fair airline.
"My view is if they're irrational, we will be rationally irrational." Virgin Blue has offered extremely cheap seats, with bookings only via the Internet and usually for a short period, when it has launched services around Australia.
While the company is focused on its domestic operations, Godfrey also acknowledged that the New Zealand market might not be the same early success story. At home, the collapse of Ansett instantly opened up substantial market share for the incumbents Virgin Blue and Qantas.
The carrier, which will operate in New Zealand under the name of Pacific Blue, plans to begin operations at the end of next month with a fleet of just two. Godfrey declined to outline the group's market share projections for New Zealand, noting it depends how many planes it decides to fly and the impact of any alliance between Qantas and Air New Zealand Ltd. that is now being opposed by regulators.
"Ultimately I'd like us to get to a sustainable level. And I think sustainable is more than single digits, it's got to be north of that and history has shown that we can do that."
"I'm comfortable, I've seen nothing in the New Zealand operations to date that suggests that we're not going to be a player in that market," he said.
Pacific Blue will commence services to the South Pacific region, including Fiji, Samoa and Vanuatu, sometime next year, he added.
Godfrey confirmed that Virgin Blue has held talks with a number of Asian carriers including Malaysia's budget carrier AirAsia and Thai Airways International Pcl about possible collaborations, but downplayed the level of discussions.
"To be quite frank, I've probably spoken to four or five carriers in Asia, more so about ground handling, sharing of ideas, maybe sharing of equipment, those sorts of things.
"We have had very very loose discussions but nothing that's substantial enough that I'd even need to convey to anybody at this time," he said.
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