Virgin Blue Keeps Positive About Challenges
The Australian | Aug. 23, 2006
Airline Virgin Blue Holdings Ltd says it is better positioned to face challenges ahead, but remains cautious because of the continued rise in fuel prices.
The company reported a net profit of AU$84.5 million for the nine months to June 30, an increase of 12.8 per cent on the prior corresponding period.
"While it's early days and the results of initiatives introduced under our New World Carrier strategy are just starting to kick in, we are now better positioned to face the challenges ahead," chief executive Brett Godfrey said.
But the company said that fuel prices averaged US$76 a barrel during the reporting period to June 30 and subsequent to this period, fuel had cost the company about US$87 a barrel.
"Benefits from revenue and cost initiatives are in line with expectations and are expected to deliver further value in the coming year," the company said.
"However, management remains cautious with regard to continued escalation of fuel prices and related household inflationary pressures which may lead to softening consumer sentiment."
The airline's revenue was AU$1.39 billion, up 8.5 per cent on the previous nine-month period.
Total operating expenditure rose 7.4 per cent to AU$1.26 billion as Virgin Blue weathered fuel and oil costs totalling AU$330.45 million, labour costs of AU$284.27 million and airport charges AU$266.73 million.
Under profit was AU$91 million, up 21 per cent, excluding AU$7 million in one-off costs related to the recent set up of its Velocity frequent flyer program.
Yield improved 2.6 per cent, passenger load factor increased to 77.9 per cent, resulting in an increase of 4.7 per cent in revenue per available seat kilometre.
Mr Godfrey said given the difficult trading environment for airlines - particularly high fuel prices - the result was pretty fair.
"Virgin Blue's business model has proven resilient during this period and ... again we have managed to reduce our controllable unit costs to record levels, and have achieved improved performance despite a AU$70 million increase in fuel costs, during the period," he said.
The company did not declare a dividend.
As a result of its takeover by Toll Holdings Ltd earlier this year, Virgin Blue has changed its financial year end to June 30 from September 30.