Virgin Australia returns to profit with increases sales to corporate customers

29 Aug 2012

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Virgin Australia Holdings Ltd, (VAH) the Australia's second-largest airline, reported a  full-year profit that fell short of analysts' estimates as surging costs hurt benefits of increased sales to corporate customers.

Net income stood at A$23 million in the 12 months ended 30 June following a loss of A$68 million a year earlier, according to the Brisbane-based carrier's statement .

Operating costs were up 16 per cent to A$3.81 billion as the airline paid bigger fuel bills, staff and airport charges. The higher spend cut the benefit of a 4.3 per cent rise in passenger numbers as the company won business class clients from Qantas Airways Ltd and entered tie-ups with carriers including Singapore Airlines Ltd and Etihad Airways PJSC.

Analysts said the cost base was going up and the challenge for Virgin was to ensure that its revenues increased well in excess of its costs.
 
Virgin shares retreated 5.2 per cent to 45.5 Australian cents, the biggest decline since 3 April paring this  year's gain to 60 per cent as against a 7.4 per cent advance for the benchmark S&P/ASX 200 index.

Qantas had fallen 19 per cent in 2012.

Virgin Australia counts Richard Branson's Virgin Group, Etihad and Air New Zealand Ltd among its shareholders.

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