Virgin Australia braces for profit drop

 The weak economic environment is likely to have an impact on Virgin Australia’s earnings, with the carrier expecting its underlying profit before tax for FY13 to be below FY12.

According to an update, the airline is expecting a positive underlying profit before tax for the fourth quarter this year, however, it will not cover the losses from introducing the new Sabre system in the third quarter.

“Given the slower trading conditions and competitive and weakening economic environment, it is not possible at this time for Virgin Australia to provide any further profit guidance for FY13,” the update read.

Virgin also expects capacity growth for the second half of FY13 to be around four percent, down from five-seven percent in its previous guidance.

Despite the drop, Virgin stressed its strategy will enable the airline to achieve maximum benefits from a recovery in market and economic conditions through; sustaining and building on yield improvements, higher penetration in the corporate and government market as well as growth in interline and codeshare revenue.

As part of the carrier’s regional expansion, Virgin Australia unveiled its new regional airline, which will operate 800 services per week to nearly 41 local destinations.

Sourced: ettavelblockboardasia