CARBON TAX GROUNDS VIRGIN PROFIT
Written on the 26 February 2013
Virgin Australia (VAH) has felt the cost of the carbon tax, announcing a net profit after tax of $23 million, down $28.8 million on the same period last year.
The company estimates the impact of the carbon tax at $24.4 million.
The decline from the prior corresponding period is also due to the 2011 industrial issues of rival Qantas, which boosted Virgin’s revenues at the time, the company says.
While Virgin has failed to deliver growth in profit, revenue is up 5.4 per cent and the airline transported a record number of passengers.
The airline carried an additional 200,000 customers, surpassing 10 million passengers for the first time in a six-month period.
CEO John Borghetti (pictured) says it is a solid result for a difficult operating and economic environment.
“This revenue growth was also achieved in the context of the highest domestic market capacity increase since the launch of Jetstar in 2004,” Borghetti says.
Virgin reported capacity growth of 8.9 per cent and forecast between 5 and 7 per cent capacity growth for the second half of the year.
He says the company has made significant progress to diversify its revenue base and enhance customer experience.
“We have continued to grow our corporate and government revenue and maintained the new norm in which more than 20 per cent of our domestic revenue comes from this higher yielding market,” Borghetti says.
Virgin’s focus on positioning for future growth is evident in the repayment of $151 million in existing debt and a free cash balance of $430 million as of December 2012.
The company will not declare a dividend, citing economic uncertainty and the need to support future strategies.
Virgin has outlined acquisition programs for Skywest Airlines and Tiger Australia.
The share price fell following the announcement, down 4.6 per cent on the previous day’s close to $0.415 late this morning.