Friday, August 27, 2010

Virgin Blue to eject V Australia from South Africa, Phuket

aus bus pix virgin blue

A Virgin Blue aircraft at Sydney Airport Source: News Limited

VIRGIN Blue Group will pull V Australia out of South Africa and Phuket and introduce new widebody Airbus A330s on its domestic services.

The moves are part of a wide-ranging network review that will also see Virgin Blue jump into bed with Middle eastern carrier Etihad, and free it to concentrate on Abu Dhabi and Los Angeles as “strategic hubs”.

The airline said it had been losing money on South Africa and believed the prospects of achieving return were remote.

It said the Phuket service was “sub-optimal” for its Boeing 777-300 aircraft.

Chief executive John Borghetti described the decision to add A330-200 planes to its domestic services as a game changer that would allow it to grow its fleet and network capabilities.

“The first A330-200s will operator services between Perth and the east coast of Australia, enabling Virgin Blue to grow available capacity, especially at peak times, extending the airline’s appeal to business travellers,” he said.

Mr Borghetti said the deal with the strategic partnership with Etihad would give V Australia a gateway to more comprehensive international long-haul network with the connection to the Middle East, UK, Europe, Africa and Asia.

The announcement came as Virgin Blue announced an underlying profit of $31 million, in the middle of its $20m to $40m revised forecast.

The airline said net profit for the year to June 30 was $21.3 million, compared with a loss of $160m a year ago.

Shares of Virgin Blue rose 1.5 cents, or 5.4 per cent, to 29.5c in early trading, outpacing a 0.3 per cent gain in the benchmark S&P/ASX 200 index.

Mr Borghetti said that achieving a net profit before tax in the current environment “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”.

The company said while the fourth quarter saw signs of recovery in Asia-Pacific, "conditions continue to be volatile and competitive activity continues to put downward pressure on yields".

"The soft growth seen at the end of the fiscal year, at this stage, is not sufficient to suggest a consistent across the board improvement in market conditions."

The group's revenue rose 13 per cent to $2.98 billion from $2.64bn, and the airline, which is part-owned by Richard Branson's Virgin Group, has not paid a dividend since early 2008.

Additional reporting: Dow Jones Newswire, AAP

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