Virgin Australia plunges into the red

Virgin Australia on Friday posted an annual net loss of Aus$98.1 million (US$87.5 million), a sharp reverse as high fuel costs and intense competition led by Qantas hurt the bottom line. The country's second biggest carrier after Qantas said the result in the 12 months to June 30 compared with a Aus$22.8 million profit in the previous corresponding period. It is in contrast to its major rival, which announced Thursday it had bounced back into the black with a Aus$5 million profit over the same period following a Aus$245 million loss in the previous year. Despite the disappointing numbers, Virgin won support from its three main shareholders, with Singapore Airlines, Air New Zealand and Etihad giving commitments Friday for unsecured loan facilities totalling Aus$90 million. In addition to competition and soaring fuel prices, Virgin said costs including a new ticketing system and Australia's carbon tax had also hit hard. There were also significant transaction costs related to its acquisition of Skywest Airlines and the purchase of a 60 percent stake in Tigerair Australia. Chief executive John Borghetti said while the results did not meet the airline's initial expectations, it had been a "pivotal year". "We completed our major restructuring and transformation programme and reshaped the competitive landscape of the Australian aviation market, despite a very difficult economic environment and intense competition," he said. Like Qantas, no future guidance was provided given the uncertain economic times.