U.S. News

Virgin Blue's Full-Year Profit Almost Doubles on Higher Demand


Australian airline Virgin Blue almost doubled its full-year earnings after attracting more corporate travelers, helping offset rising fuel bills.

Net profit for the year to June 30 was A$216 million (US$174 million) compared with A$112 million a year earlier. Net profit before one-off items was A$232 million.

This compared with analyst expectations of A$204.4 million, according to the mean of 9 forecasts on Reuters Estimates.

Virgin Blue, Australia's second-largest airline, said it expected further revenue growth this year but also higher costs as it sets up new services in New Zealand and to the United States.

Rival Qantas Airways also said last week passenger demand had pushed up annual earnings 50% and tipped a strong year with no sign of a let up in appetite for air travel.

Virgin Blue said it has 49% of its fuel requirements hedged for the current year and 77% of its currency requirements hedged.

The company last month said it planned to launch a new airline called V Australia to fly on routes between Australia and the United States. The plan still needs U.S. regulatory approval.

Virgin, 62% owned by Toll Holdings, also flies to New Zealand, Fiji and Tonga. It has about a third of Australia's domestic market where it competes against Qantas and its budget carrier Jetstar.

Virgin has six Boeing 777-300ER widebody aircraft on order with options for another six.

Competition is hotting up in Australia's domestic market with the arrival of Singapore's Tiger Airways and Qantas expanding its services. Middle Eastern carriers also adding flights to Australia routes.