Wirraway
22nd Apr 2004, 18:33
Fri "Melbourne Age"
Virgin Blue shares not flying according to plan
By Jamie Freed
Sydney
April 23, 2004
Virgin Blue Holdings shares have struck turbulence, struggling to remain above their issue price amid fears of escalating competition in the domestic aviation market and analysts conceding their initial estimates for the budget carrier's earning were overly optimistic.
Virgin Blue's December prospectus predicted a $150 million profit for the year ended March 31 but analysts thought the estimate conservative and forecast a profit of $160 million or higher. Now, some have downgraded their expectations, believing the $150 million figure is fairly accurate.
"There are some recent statistics out suggesting that operationally it is not quite doing as well as would otherwise have been expected," said Brent Mitchell, research manager at Shaw Stockbroking.
In a research note, Credit Suisse First Boston analysts said they were disappointed with February statistics that showed Virgin Blue had more cancellations and fewer on-time arrivals than Qantas. Nevertheless, CSFB still rated the stock "outperform."
Others said concerns about competition from Jetstar, Qantas's low-budget carrier launching next month, might have scared some investors.
The airline's shares plumbed a low of $2.20 yesterday before closing at $2.27, just 2¢ above the December initial offer and down from a high of $2.62 in February.
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Virgin Blue shares not flying according to plan
By Jamie Freed
Sydney
April 23, 2004
Virgin Blue Holdings shares have struck turbulence, struggling to remain above their issue price amid fears of escalating competition in the domestic aviation market and analysts conceding their initial estimates for the budget carrier's earning were overly optimistic.
Virgin Blue's December prospectus predicted a $150 million profit for the year ended March 31 but analysts thought the estimate conservative and forecast a profit of $160 million or higher. Now, some have downgraded their expectations, believing the $150 million figure is fairly accurate.
"There are some recent statistics out suggesting that operationally it is not quite doing as well as would otherwise have been expected," said Brent Mitchell, research manager at Shaw Stockbroking.
In a research note, Credit Suisse First Boston analysts said they were disappointed with February statistics that showed Virgin Blue had more cancellations and fewer on-time arrivals than Qantas. Nevertheless, CSFB still rated the stock "outperform."
Others said concerns about competition from Jetstar, Qantas's low-budget carrier launching next month, might have scared some investors.
The airline's shares plumbed a low of $2.20 yesterday before closing at $2.27, just 2¢ above the December initial offer and down from a high of $2.62 in February.
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