Virgin Australia $23m Profit Down 56% 1H2013

Airline company, Virgin Australia (ASX:VAH) have announced its half year financial results for 2013 to its shareholders and investors on the Australian stockmarket.

• Virgin Australia Net Profit of $23 million for the half, down 56 percent from $52 million in the previous corresponding period.
• Virgin Australia's underlying profit before tax down to $61 million from $91 million. The first half of 2011-2012 gave Virgin an advantage after industrial action at Qantas.
• The result also includes a $24 million carbon tax.
• Pre-tax earnings of $49 million for the 6 months, down from $87 million previously.
• International operations earnings was up 9 percent to $35 million from its alliances with airlines including Etihad and Singapore Airlines.
• Virgin Australia's chief executive John Borghetti said, "The group has delivered a solid result in a difficult operating and economic environment, reflecting the significant progress we have made in diversifying our revenue base and improving cost control, while continuing to enhance the customer experience."
• Virgin Australia has received approval to takeover Skywest, but is still in the process of getting approval from the regulator for the acquisition of 60 percent of Tiger Australia.
• The Competition watchdog wants to impose a deal if Virgin takes a controlling stake in Tiger, it must boost Tiger's fleet from 11 to 35 airplanes by 2018. ACCC will make a ruling on March 14.
• CEO John Borghetti said, "You can’t give an iron-clad guarantee on something like that because you just don’t know what’s around the corner. No airline in the world would give a capacity commitment for five years."
• Last week Qantas claimed that it had 84 percent market share of the corporate travel market.
• Increased capacity in the Australian domestic airline market has seen Qantas and Virgin lose profits. Both airlines have not passed on costs relating to the carbon tax.
• Virgin forecast 2012/13 second half domestic capacity growth would be between five and seven per cent up on the prior corresponding period.
• Virgin Australia has reported a five-fold increase in bookings through the Global Distribution System (GDS) but notes that there is a 10 percent premium on bookings through the system. The cost of transitioning to a new system was at $36 million.
• The company had recently (during January 12-13) transitioned from the troubled Navitaire system over to the Sabre booking system.
• No dividend was declared by the company.