13-Apr-2011 11:51 AM

Virgin Blue and Qantas most affected by carbon tax

JPMorgan Australia stated Virgin Blue and Qantas will be Australia’s most-affected companies when the government introduces a carbon tax in 2012. JPMorgan expects the earnings per share (EPS) impact of a carbon price of AUD25 per tonne will result in a 28% EPS decrease between FY2013-2015 at Virgin Blue, making Virgin Blue Australia’s most affected company by the tax. Qantas, which has non-Australian related emissions, is next on the list and is likely to face a fall of 12% in EPS terms. The broker assumes Qantas and Virgin Blue are able to pass 75% of the carbon cost onto customers. Qantas CEO Alan Joyce has previously stated carbon taxes will likely to be passed onto passengers, with the carrier unable to “digest the full cost”.

Qantas: “The ability for us to pass on [the charge] will obviously at the time depend on how robust the market is, how robust demand is, but it would be our intention that it would have to be passed on to the passengers 'cause the margins that we make in this business isn't sufficient enough for us to digest this charge,” Alan Joyce, CEO. Source: e-Travel Blackboard, 13-Apr-2011.

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