Shares in Virgin Blue Holdings fell 18.5 percent to a record low on Monday after Australia's second-biggest airline warned its profit would more than halve as it faces higher fuel costs and competition.
Virgin Blue, in which transport group Toll Holdings owns a 63 percent stake, said after the close of trading on Friday that its net profit would drop to around A$100 million (US$93 million) this year, from A$216 million a year earlier.
It could also incur an extra A$120 million in fuel costs next year and faced an increase in capacity as new carriers enter the market.
"It is sobering to note the guidance implies the business just breaking even in the second half," said a research note from analysts at UBS, who cut the stock to sell from neutral and lowered their forecast for next year's earnings by 36 percent.
Virgin Blue stock, which traded above A$2 in February, was down 18.5 percent at A$0.91 in the morning session. Shares in Toll were 12 percent lower at a 19-month low of A$8.31.
UK entrepreneur Richard Branson's Virgin Group owns about 25 percent in Virgin Blue.
The carrier, which competes with Qantas Airways, appointed Goldman Sachs JBWere in February to review its future amid reports it could sell a controlling stake to another airline. On Friday it said buyer interest did not reflect the airline's underlying value and it was reviewing alternatives.
Separately, Qantas said on Monday that Pacific Airlines, Vietnam's second largest carrier in which Qantas has an 18 percent stake, will be renamed Jetstar Pacific.
Jetstar Pacific planned to introduce up to 30 Airbus A320 aircraft by 2014, Qantas said. The first A320 is expected to start in August, initially growing services within Vietnam, before international expansion from late this year into markets likely to include Thailand, Singapore, Malaysia and Cambodia.
Qantas will increase its stake to 30 percent in 2010.