Bo777
27th Aug 2009, 04:25
Virgin Blue Loses A$160M; Expects Break-Even In FY10
SYDNEY (Dow Jones)--Australia's second-largest airline, Virgin Blue Holdings Ltd. (VBA.AU), Thursday posted a loss of A$160.0 million for the year to June 30, compared with a net profit of A$97.7 million a year earlier after facing the toughest operating conditions in its nine year history.
The airline group, which is part owned by Richard Branson's Virgin Group (VGN.YY), said based on current market conditions, it expects to break-even this year, with a positive cash-flow even after excluding a A$231.4 million capital raising launched last month.
Despite intense competition continuing on domestic routes, Virgin Blue said yields on its short-haul business had improved from May to July.
"Whilst it cannot be considered a recovery at this stage, it does indicate some stabilization at least in the domestic market," the airline said in a statement.
The cautiously optimistic outlook comments echoed those from its major rival Qantas Airways Ltd. (QAN.AU) when it posted an 87% decline in its annual profit last week.
At 0257 GMT, shares in Virgin Blue were one cent weaker at A$0.34, with Qantas down one cent at A$2.67 in a market that was just 0.1% higher.
Founding Chief Executive Brett Godfrey, who has said he will leave the airline during 2010, said that cost saving and productivity initiatives, redeployment of excess domestic capacity onto short-haul international routes, and the removal of up to 400 positions, had helped cut the group's variable cost base by 4.5% during the year.
"While airlines have been variously impacted by the global economic crisis, our approach was to respond swiftly and definitively to softening domestic demand," said Godfrey in a statement.
Virgin Blue's revenue rose 13% to A$2.64 billion from A$2.33 billion, and the group said its underlying loss excluding one off costs and after tax was A$13 million. It won't pay a final dividend, consistent with a year ago.
At the time of the raising to improve its liquidity and financial flexibility, the carrier said it expected a net loss of between A$160 million and A$165 million due to losses on its new long-haul airline V Australia and expenses related to its fuel and currency hedges.
The group said a loss of A$124 million for startup costs and the first four months of V Australia's operations on the transpacific route reflected "the difficult long haul environment compounded by the U.S.-centric focus of the launch routes."
V Australia filled just 62.3% of its seats since its launch in late February, with revenue of A$69 million.
However, the company expressed hope that further route expansion, starting with Phuket in November and Johannesburg in March, and its planned alliance with Delta Airlines (DAL) - which commenced flights between the U.S. and Australia in July - will help the profitability of its long-haul carrier.
-By Bill Lindsay, Dow Jones Newswires
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SYDNEY (Dow Jones)--Australia's second-largest airline, Virgin Blue Holdings Ltd. (VBA.AU), Thursday posted a loss of A$160.0 million for the year to June 30, compared with a net profit of A$97.7 million a year earlier after facing the toughest operating conditions in its nine year history.
The airline group, which is part owned by Richard Branson's Virgin Group (VGN.YY), said based on current market conditions, it expects to break-even this year, with a positive cash-flow even after excluding a A$231.4 million capital raising launched last month.
Despite intense competition continuing on domestic routes, Virgin Blue said yields on its short-haul business had improved from May to July.
"Whilst it cannot be considered a recovery at this stage, it does indicate some stabilization at least in the domestic market," the airline said in a statement.
The cautiously optimistic outlook comments echoed those from its major rival Qantas Airways Ltd. (QAN.AU) when it posted an 87% decline in its annual profit last week.
At 0257 GMT, shares in Virgin Blue were one cent weaker at A$0.34, with Qantas down one cent at A$2.67 in a market that was just 0.1% higher.
Founding Chief Executive Brett Godfrey, who has said he will leave the airline during 2010, said that cost saving and productivity initiatives, redeployment of excess domestic capacity onto short-haul international routes, and the removal of up to 400 positions, had helped cut the group's variable cost base by 4.5% during the year.
"While airlines have been variously impacted by the global economic crisis, our approach was to respond swiftly and definitively to softening domestic demand," said Godfrey in a statement.
Virgin Blue's revenue rose 13% to A$2.64 billion from A$2.33 billion, and the group said its underlying loss excluding one off costs and after tax was A$13 million. It won't pay a final dividend, consistent with a year ago.
At the time of the raising to improve its liquidity and financial flexibility, the carrier said it expected a net loss of between A$160 million and A$165 million due to losses on its new long-haul airline V Australia and expenses related to its fuel and currency hedges.
The group said a loss of A$124 million for startup costs and the first four months of V Australia's operations on the transpacific route reflected "the difficult long haul environment compounded by the U.S.-centric focus of the launch routes."
V Australia filled just 62.3% of its seats since its launch in late February, with revenue of A$69 million.
However, the company expressed hope that further route expansion, starting with Phuket in November and Johannesburg in March, and its planned alliance with Delta Airlines (DAL) - which commenced flights between the U.S. and Australia in July - will help the profitability of its long-haul carrier.
-By Bill Lindsay, Dow Jones Newswires
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