Virgin Blue profits plummet in 1HFY2011, 2HFY2011 remains challenging

Virgin Blue revenue up 12% - financial highlights for the six months ended 31-Dec-2010:

• Total revenue: USD1696 million, +11.8% year-on-year;
• Revenue: USD1693 million, +12%;
  • Short-haul: USD1490 million, +7.9%;
  • Long-haul: USD230.2 million, +85.7%;
• Operating costs: USD1617 million, +14.6%;
  • Fuel: USD433.6 million, +12.7%;
  • Labour: USD364.2 million, +19.9%;
• Segment operating profit (loss): USD78.5 million, -25.5%;
  • Short-haul*: USD83.9 million, -18.5%;
  • Long-haul: (USD7.5 million), compared to a loss of USD24.2 million in p-c-p;
• Profit before tax: USD36.8 million, -63%;
• Net profit: USD23.8 million, -62%;
• Passenger traffic (RPKs): +14.4%;
• Passenger load factor: 80.3%, -0.6 ppt;
  • Short-haul: 78.9%, -1.4 ppt;
  • Long-haul: 88.8%, +7.7 ppts;
• Yield: USD 11.23 cents, -2.5%;
  • Short-haul: +1.0%;
    • Domestic: +0.6%;
    • International short-haul: +1.0%;
  • Long-haul: +15.0%;
• Underlying cost per ASK: -0.4%;
  • Domestic: -1.5%;
  • International short-haul: +4%;
  • Long-haul: +8.7%;
• Underlying cost per ASK excl fuel: USD 6.24 cents, +0.2%;
• Total assets: USD3914 million, +1.0%;
• Cash and cash equivalents: USD772.6 million, -5.2%;
• Total liabilities: USD2963 million, +0.8%. [more]

*Based on the conversion rate at AUD1 = USD1.00045
*Includes impact of reservation system outage in Sep-2010

The carrier estimates a USD40 million impact from the Queensland floods as well as a USD10 million impact from cyclone Yasi.

Virgin Blue: "The outlook for the second half of the year is expected to be challenging. Further strengthening is expected in the business sector, both domestic and international, where confidence is returning and leading the economic recovery. However, 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. Domestic capacity growth remains under review and the Group retains the flexibility to reduce capacity below the full year forecast of 6-8% if required," Company statement. Source: Virgin Blue, 23-Feb-2011.