The numbers are out
Airline group Virgin Blue Holdings has reported a big decline in first-half net profit and says conditions in the second half are expected to be challenging.
Virgin Blue said net profit for the six months to December 31, 2010, came in at $23.8 million, down 62 per cent from the prior corresponding period.
The result was below the market consensus of $27 million, according to the median of five analysts' forecasts gathered by AAP.
Advertisement: Story continues below Company guidance, issued last month, was for net profit of between $23 million and $26 million.
Revenue rose 12 per cent to $1.693 billion, Virgin Blue said in a statement on Wednesday.
Virgin Blue chief executive John Borghetti said while business traffic was improving on both domestic and international routes, the same could not be said for the leisure market.
"In the domestic leisure market, flat consumer confidence, forecast industry capacity growth and flow-on impacts from the recent weather events will impact domestic demand," Mr Borghetti said in a statement.
The airline has flagged a six to eight per cent increase in capacity for the full 2010/11 year, but added that "domestic capacity growth remains under review".
The airline group comprises Virgin Blue, Polynesian Blue, Pacific Blue and V Australia.
Underlying profit before tax - the company’s preferred measure - came in at $72 million for the first half, Virgin Blue said, down from $75.6 million in the prior year but within guidance of between $70 million and $75 million.
The market consensus for underlying profit before tax was $73 million.
Mr Borghetti said yield, or average fares per passenger, had improved on both the airline’s long-haul and short-haul routes.
The half had also been impacted by a number of one-off events, such as Virgin Blue’s Navitare IT system outage, restructuring costs and adverse weather across Australia and New Zealand, Mr Borghetti said.
Virgin Blue’s long-haul offshoot V Australia reported negative earnings before interest and tax (EBIT) of $7.4 million in the first half of 2010-11, an improvement from negative EBIT of $24.2 million in the prior year.
Mr Borghetti said V Australia was ‘‘on track for reaching close to breakeven’’ at the EBIT level for the full financial year.
‘‘This follows the cancellation of non-profitable routes, changes to current schedules aimed at profit maximisation and the beginning of the benefits flow through from our international alliance strategy,’’ Mr Borghetti said.
Short-haul flying, including domestic flights and international destinations in the Pacific and Asia, posted positive first half EBIT of $83.9 million, down from $103 million in the prior corresponding period, Virgin Blue said.
The 2010-11 result was hit by the reservation system outage in September last year.
More to come
AAP