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Virgin Blue Flying High With Financial Figures
Virgin Blue, Australia's only low fare carrier has celebrated its first preliminary financial results by announcing it will begin flying on the world's third busiest route, Sydney-Melbourne as of July 15.
The decision follows the release of Virgin Blue's first trading figures since its start-up on August 31 last year to its balance sheet date of 31 March 2001.
Virgin Blue expects to record a trading profit in excess of half a million dollars for the financial period ending 31 March 2001. The net result after the writing off of abnormal items will be a loss of $11-million.
The non-trading abnormal item relates to the board's decision to write off all costs associated with Virgin Blue's pre-commencement (16 month period from November 1999 to August 30 2000). Further details will be released next week after KPMG gives audit clearance.
Chief Executive, Brett Godfrey, said "this is an exceptional result and we are delighted, given we are in start-up phase and facing intense competitive pressures, a failing currency and Gulf War level aviation fuel prices. We believe we will be well positioned to perform even better when market conditions improve".
Virgin Chairman, Richard Branson, hadn't anticipated Virgin Blue to be profitable within its first 3-4 years. The airline had its first profitable month in December 2000, just four months after its start-up.
Brett Godfrey said, "in simple terms, Virgin Blue is cash positive, despite the doomsday analysts and other cynics who predicted we wouldn't even get off the ground, let alone be flying long enough to announce our first financial results. We believe these results will surprise the financial community, disappoint the competition and entrench our position, matched only by our commitment to remain as a viable and sustainable alternative to the big guys."
Brett Godfrey continued, "Qantas has spent a lot of time whining about us 'whinging'. I imagine its shareholders will be the ones whinging to their overconfident management team that continues to fritter away Qantas's domestic profitability in a futile endeavour to squeeze us out of the sky. From a competitors standpoint, the sooner Qantas accepts our right to co-exist in the domestic market, the sooner equilibrium will be restored, ensuring sustainable low fares and stronger future domestic profitability for all.
This better than expected performance has led Richard to ask us to move on to the nation's busiest route, Sydney-Melbourne," he added.
Virgin Blue will begin flying between Australia's two largest cities with five return flights daily, and plans to increase frequency towards the end of the year with the arrival of more brand new Next Generation aircraft.
Brett Godfrey said, "Due to the tremendous demand and support we've received to date, we decided to launch ahead of schedule. As the industry knows, the availability of low fares on this key business route was becoming virtually impossible to find. We are entering this market to live up to our mantra of keeping the air fair".
Flights on the Sydney-Melbourne route will begin on July 15 with Fair Fares* available from $66 one way on the net and Fully Flexible Fares** at $189, near half of what the other carrier's charge for their walk-up fares.
"Business travellers can now choose whether they want to fly with Virgin Blue and control their travel costs or continue paying through the nose. I think Virgin Blue's Sydney-Melbourne service will be the CFO's dream ticket," concluded Brett Godfrey.
The news was delivered today as Virgin Blue proudly launched its new daily direct Sydney-Gold Coast service.
Virgin Blue operates the most modern, technologically advanced aircraft in Australia today, with an average age of less than 5 years, compared with Ansett's average fleet age of 11.7 years and Qantas with an average fleet age of 10.8 years. (Salomon Smith Barney 2001 Fleet handbook)
* "Fair Fares" are changeable for a fee 24 hours before the flight - Virgin Blue has no "use it or lose it" policy and all tickets are valid for 12 months.
** "Fully Flexible Fares" can be changed up to 1 hour before the flight and can also be transferred to a friend, relative or colleague (both free of charge).