Virgin Australia expects loss of $98m for year

Last year, Virgin Australia posted a full-year net profit of Aus$22.8m Virgin Australia said Monday it was expecting a full-year loss of Aus$95-$110 million (US$84-98 million) due to a range of factors including the tough economic environment and restructuring costs. In updated guidance for the financial year ended June 30, 2013, Virgin said its performance had been hit by the "difficult economic and competitive environment", costs associated with its transformation, and Australia's carbon tax.
"As a result of these factors, Virgin Australia expects a statutory loss after tax in the range of $95 million to $110 million," it said in a statement.
Virgin Australia said costs included the transition to the new Sabre booking and check-in system, transaction costs related to the acquisition of Skywest Airlines and the acquisition of 60 percent of Tiger Airways Australia.
It also confirmed that the pre-tax costs of the carbon tax, a levy on Australia's biggest polluters, for the 2013 financial year would be $45-$50 million.
It said the carbon tax cost was "unable to be recovered due to weak economic conditions and the competitive environment".
Virgin Australia, the country's second largest carrier after Qantas Airways, last year posted a full-year net profit of Aus$22.8 million.
"Although today's update is disappointing and notwithstanding a challenging environment, we have made significant progress on the execution of our game change programme," Virgin Australia chief executive John Borghetti said.
"We now have the right platform in the Australian market to generate sustainable earnings benefits."
The airline said forward domestic bookings as at June 30, 2013 were about six percent higher than the same time last year and it expected domestic capacity growth in the first half of the 2014 financial year to be within three to four percent.
Source: AFP