Virgin Blue issues profit warning, shares dive


Virgin Blue's shares fell 2.3% yesterday to AUD0.415, having dropped as much as 5% in early trade, after the carrier revealed first half profit could fall more than 50% year-on-year, due to a slowdown in consumer spending, the Sep-2010 booking system meltdown and fuel hedging losses.

  • Virgin Blue's shares fell due to a projected decline in first-half profits of over 50%.
  • The decline in profits is attributed to a slowdown in consumer spending, a booking system meltdown, and fuel hedging losses.
  • Second-half profits may also be affected by a projected AUD40 million revenue shortfall due to reduced tourism in flood-affected Queensland.
  • Virgin Blue expects a net profit of AUD23 million-26 million for the six months ending 31-Dec-2010, compared to AUD62.5 million the previous year.
  • Qantas' shares experienced a slight decline, while Air New Zealand's shares rose after acquiring a strategic stake in Virgin Blue.
  • This performance reflects the broader trend in Asia Pacific airline shares on 25-Jan-2011.

Second half profits could also be hit by an expected AUD40 million shortfall in revenue as tourism to flood-affected Queensland (the carrier's home market) slows.

The airline expects net profit for the six months to 31-Dec-2010 to fall to AUD23 million-26 million, down from AUD62.5 million last year.

Qantas' shares eased 0.4, while Air New Zealand, which acquired a strategic stake in Virgin Blue less than a week ago, rose 2.1% yesterday.

Asia Pacific airline shares performance: 25-Jan-2011


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