Virgin Australia issues profit warning

Virgin Australia issues profit warning

Weak economic conditions and a move to a new reservations system have been blamed by Virgin Australia for a profits warning.

The Brisbane-based airline said pre-tax profit in the year to June would be lower than last year’s A$82.5 million.

The profit downgrade prompted a 10.9% drop in the airline’s share price, the Financial Times reported.

Virgin Australia said: “The adverse impact to revenue from the introduction of the Sabre system in the third quarter is not likely to be recovered by the end of [the] 2013 financial year, given the slower than anticipated improvement in trading and economic conditions.

“It is not possible at this time to provide any further profit guidance.”

Capacity growth in the first half of the 2014 financial year would be within the 4-5% range.

The airline should be helped by the acquisitions of Skywest Australia, a regional carrier, and budget airline Tiger Australia.

Virgin Group founder Sir Richard Branson recently reduced his holding in the airline to 13% through the sale of a 10% share worth A$123 million to Singapore Airlines.

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