Virgin Blue is abandoning New Zealand after millions of dollars of losses in the three years of flying domestically across the Tasman.
Air New Zealand and Qantas will be the immediate beneficiaries of the news, announced by Virgin Blue yesterday.
“Pacific Blue will cease flying New Zealand domestic routes and redeploy its New Zealand-based aircraft on to trans-Tasman and medium haul international routes. Guests holding forward bookings on New Zealand domestic routes from 18 October onward will be provided with reaccommodation and refund options,” CEO John Boghetti said.
The news saw Air New Zealand shares rise on a day when the market was in the red. Air New Zealand was up 2c at 91.5c, but Virgin Blue was off one cent at 29c and Qantas shares were down 2.4% at $2.46.
The announcement is the first phase of its network review, released yesterday, which includes redeploying its 737 aircraft which have been used to fly domestic New Zealand services to trans-Tasman and South Pacific routes.
Mr Borghetti said there was no end in sight to Pacific Blue losing money in New Zealand because three airlines were competing for travellers in a country of just 4 million people.
“By restructuring our Pacific Blue operations we are now able to free up our long haul V Australia aircraft to capture the growing demand for travel to the USA," he said.
The group’s long-haul offshoot, V Australia, will stop flying to Fiji, and the company will instead use Pacific Blue’s 737 aircraft on that leisure route.
Pacific Blue will also increase services over the coming months on routes including Melbourne-Denpasar, Perth-Phuket, Melbourne-Christchurch, Brisbane-Dunedin and Brisbane-Hamilton, effectively taking on Jetstar.
It will also change schedules for V Australia flights between Sydney and Los Angeles, which will now leave Australia in the mornings so as to give travellers same-day connections to the US’s east coast.
V Australia’s flights between Sydney and LA will be increased to daily services from December, and it will operate an additional weekly service for each of its routes from Melbourne to Johannesburg, LA and Phuket.
And Funtastic Furniture had some good news for shareholders in a trading update yesterday with a move back into the black.
Or what seemed on the surface to be good news.
It told the ASX that unaudited results for first half of 2010 show a return to profitability.
In a trading update, Funtastic said it would record earnings before interest, tax and amortisation (EBITA) of $3.4 million in the half year to the end of June, from a $7.3 million loss in the prior corresponding period.
Profit before tax would be $400,000 in the period, from a $30.4 million loss in the first half of 2009 and sales from continuing operations were 8% down on the corresponding period in 2009.
The news didn’t impress investors with the shares down 1c, or 4.5%, at 21c.
"Funtastic’s key brands in the Toys and Sporting business performed well in the first half but our secondary brands suffered as retailers reduced their support for all but the strongest performing brands during the tough retail environment," Funtastic chief executive Stewart Downs said in a statement.
Funtastic said it is changing its financial year to end on July 31 and that as part of the process, will not deliver half year results, but an end of year report covering the seven months to the end of July.
Despite news of the turnaround in the six months to June, the company had bad news over the page of its release, July wasn’t so good.
"Financial performance in the month of July, traditionally a very soft period for the industry, is likely to be loss-making and would therefore represent a drag on the result for the first six months.
"Whilst management expects that the Company will be profitable at an EBITA level for the seven months ended July 2010, it believes that, on a profit before tax basis, the Company will be slightly loss making."
That explains the 9% drop in the price, despite the improved looking headline story.
Finally, timber and woodchip group Gunns says it will post a 50% drop in annual net profit due to impairments.
The company revealed the news yesterday in a trading update ahead of the release of the formal full year report tomorrow.
Gunns said it had completed a review of the carrying value of some of its assets, and it expects to book a $98.1 million impairment charge for the year to June 30.
It will also post an annual net profit of $28 million, according to preliminary and unaudited figures, down from the $56.24 million earned in 2008-09.
Underlying earnings before interest and tax will be $52.2 million, within Gunns’ previous guidance, the company said in the release to the ASX (http://imagesignal.comsec.com.au/asxdata/20100816/pdf/01088193.pdf).
"On June 11, Gunns advised the market that it expected to report full-year earnings before interest and tax (EBIT) between $50 to $60 million and that a review
