Times are getting tougher for airlines, not just Qantas with the dodgy Airbus engines and other woes.
Virgin Blue’s chief executive, John Borghetti, yesterday resisted giving earnings guidance for the full 2011 to his first AGM because the market is so uncertain.
Although Virgin remained profitable, he stressed that "competitive pressure" in the industry and reduced consumer spending meant it would struggle to significantly improve yields in the short term.
"Trading conditions are improving but it is still early days," Mr Borghetti said.
"As the outlook remains volatile, I hesitate to provide specific market guidance at this stage."
And chairman Neil Chatfield made similar comments in his speech to the AGM.
"The company continues to be profitable, however, the market remains volatile and continuing competitive pressure, along with stress on consumer spending, is constraining our ability to significantly improve yields, in the short term.
"If the positive trends do not strengthen, we have the flexibility to adjust our capacity and defer aircraft purchases and other expenditure to meet market conditions."
The airline did not give any guidance in August when it reported that its earnings had swung back into the black in the year to June, from a loss of $160 million in 2008-09.
But that rebound included a tough second half which saw the airline only just break even.
Virgin Blue remains heavily reliant on the leisure market in Australia despite the continuing and very public expansion upmarket into business travel sector where it is running headlong into Mr Borghetti’s old employer, Qantas.
Mr Borghettis reluctance follows the computer meltdown of its booking system in late September which Virgin estimates could slice this year’s earnings by up to $20 million by June 30, 2011.
VBA shares rose 1c to 44.5c.
Mr Borghetti told the meeting in Brisbane that Virgin Blue’s fledging long-haul offshoot, V Australia, was on track to break even by the end of June next year.
Virgin is hoping that a proposed alliance with US airline Delta will help stem losses on the Pacific route.
Domestically, Mr Borghetti said that he expected capacity in its key domestic network to increase by between 6% and 8% this financial year.
Shareholders were told that two new Airbus A330-200 will start flying in early 2012, taking the total number to four. They will be used to fly between Australia’s east coast and Perth, which is an important business route, especially for the resources companies headquartered on the East Coast.
Mr Borghetti spent a lot of time in yesterday’s speech explaining his strategic plan aimed at capturing a bigger slice of the lucrative business travel market.
The airline wants to increase its share of the market from 10% to as much as 20% within two years.
Virgin Blue’s chief executive, John Borghetti, yesterday resisted giving earnings guidance for the full 2011 to his first AGM because the market is so uncertain.
Although Virgin remained profitable, he stressed that "competitive pressure" in the industry and reduced consumer spending meant it would struggle to significantly improve yields in the short term.
"Trading conditions are improving but it is still early days," Mr Borghetti said.
"As the outlook remains volatile, I hesitate to provide specific market guidance at this stage."
And chairman Neil Chatfield made similar comments in his speech to the AGM.
"The company continues to be profitable, however, the market remains volatile and continuing competitive pressure, along with stress on consumer spending, is constraining our ability to significantly improve yields, in the short term.
"If the positive trends do not strengthen, we have the flexibility to adjust our capacity and defer aircraft purchases and other expenditure to meet market conditions."
The airline did not give any guidance in August when it reported that its earnings had swung back into the black in the year to June, from a loss of $160 million in 2008-09.
But that rebound included a tough second half which saw the airline only just break even.
Virgin Blue remains heavily reliant on the leisure market in Australia despite the continuing and very public expansion upmarket into business travel sector where it is running headlong into Mr Borghetti’s old employer, Qantas.
Mr Borghettis reluctance follows the computer meltdown of its booking system in late September which Virgin estimates could slice this year’s earnings by up to $20 million by June 30, 2011.
VBA shares rose 1c to 44.5c.
Mr Borghetti told the meeting in Brisbane that Virgin Blue’s fledging long-haul offshoot, V Australia, was on track to break even by the end of June next year.
Virgin is hoping that a proposed alliance with US airline Delta will help stem losses on the Pacific route.
Domestically, Mr Borghetti said that he expected capacity in its key domestic network to increase by between 6% and 8% this financial year.
Shareholders were told that two new Airbus A330-200 will start flying in early 2012, taking the total number to four
