SYDNEY, Aug 27, 2010 (AFP) – Australian budget airline Virgin Blue reported a return to profit Thursday, reversing a A$160 million (US$140 million) loss to net profit of A$21 million, but warned of ongoing volatility.
The no-frills carrier slashed its earnings outlook in half in late May to between 20 and 40 million dollars, following renewed economic turbulence and a slump in consumer confidence.
Virgin said the Asia-Pacific region showed its first signs of recovery in the three months to June, offsetting poor market conditions in the preceding three quarters, but warned that conditions remained shaky.
''Conditions continue to be volatile and competitive activity continues to put downward pressure on yields,'' Virgin said in a statement to the Australian Stock Exchange.
''Together with our proposed alliances with Delta Air Lines and Air New Zealand the Virgin Blue network will seamlessly extend its reach to many more overseas destinations with little capital expenditure,'' Chief Executive Borghetti said.
He said the result ''demonstrates that Virgin Blue's domestic business has the capability to ride through market and economic volatility, and remain well positioned to extend its reach in key markets.''
To that end, Borghetti announced a code-sharing partnership with Etihad which will see Virgin's long-haul international arm V Australia launch three weekly Sydney to Abu Dhabi services from 2011. It would drop non-profiting services to Fiji, South Africa and Phuket.
Domestically, Virgin would also bring two Airbus A330-200 aircraft online to boost services along the busy east coast corridor and popular cross-continent route to the west coast city of Perth, he added.
The changes were aimed at capitalizing on the increasing popularity of budget flight options with corporate and government groups, he said.
Virgin Blue, which is part-owned by Richard Branson's Virgin group and is Australia's second-largest airline, has not returned a dividend since 2008.
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