Patrick slams Virgin
news.com.au
Patrick slams Virgin
By Kaaren Morrissey
February 03, 2005
From: AAP
PATRICK Corp chief executive Chris Corrigan today said his company would be happy to take a controlling stake in Virgin Blue, saying the airline needed to change its model to better deal with competition from Qantas and Jetstar.
"We are satisfied with a controlling stake," Mr Corrigan said after announcing financial results. Mr Corrigan declined to comment on whether Patrick would have to increase its bid for Virgin Blue after Richard Branson said last week the offer was too low.
He said the two parties clearly disagreed on what was fair value for the airline but he would not be against Mr Branson remaining on board at Virgin Blue.
"I welcome him to stay on as a shareholder," he said.
Mr Corrigan said he felt strongly that Virgin Blue should adapt its model to deal with the threat of Qantas' low-cost airline Jetstar.
"We need to adapt this model to the Australian environment," he said.
"We underestimated the impact of Qantas (Jetstar)."
Virgin results disappointing
Mr Corrigan took a swipe at Virgin Blue's so-called "Happy Hour" $1 airfare.
"Clearly you are not making any money from a $1 airfare," he said.
He said the rapid fall in airfares seen in the market since Jetstar began operations needed to stop.
Mr Corrigan said at the meeting that the airline's September half profit and the profit downgrade in January were disappointing.
"Profitability hasn't been as good as hoped," Mr Corrigan told shareholders.
"Since Jetstar the operating environment has been much more competitive."
He said the aviation industry was still adding too much capacity for the level of demand, while fuel levies on ticket prices was also having an impact.
"Fuel levies and higher airport charges are now slowing demand," he said.
Patrick's operating profits for the quarter to December, 2004 were in line with expectations, excepting the equity accounted results for Virgin Blue.
Patrick described its result for the year to September, 2004 as "satisfactory", adding that it represented the company's sixth consecutive record profit.
It said revenue from operating activities increased 14 per cent to $1.25 million, excluding equity share of associates.
Total earnings before interest, tax and individually significant items increased 22 per cent to $253 million.
Virgin Blue's contribution to total earnings was $48.9 million, down four per cent on last year.
Pacific National's contribution totalled $45.8 million, an improvement of 56 per cent on the year.
"These financial results reflect strong organic growth of the Patrick businesses combined with a continued focus by management on cost control and productivity improvement across the group," the company said.
AAP
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