Virgin Blue issues another profit warning – now expecting net profit of AUD20m-40m
Virgin Blue announced (28-May-2010) the group now estimates its net profit before tax and exceptional items for FY2010 will be in the range of AUD20-40 million, compared with previous guidance of AUD80 million (down from Feb-2010 guidance of AUD80-110 million). The short-haul business is still expected to make a net profit before tax and exceptional items in the order of AUD100 million. The carrier stated it will continue to monitor market conditions and, should these prevail, it has flexibility to adjust capacity through lease returns. However, it remains focused on defending its core strategic routes. Virgin’s focus on cost control has continued, with cost per available seat kilometre (excluding fuel) expected to show a further decrease over that achieved in the first half. [more]
Virgin Blue: "[We have] continued to see rapid deterioration and increased volatility in the operating environment, particularly in respect of the leisure segment both domestically and internationally. This is consistent with the weakening trend seen recently in the broader retail market as well as an unexpected and sudden decline in consumer confidence in the last month. The decline in demand has coincided with a period of increased industry capacity. Virgin expects average fares to decrease by over 10%, in line with the trend seen in the recent BITRE data for discount economy fares", Media Statement, 28-May-2010.