Airline passengers heading to or from Australia could be affected by the latest news to emerge from the Virgin Group today.
V Australia hopes to break through the recessional clouds
It seems that even the effervescent Sir Richard Branson is not immune to the ravages of the recession. His budget Airline company Virgin Blue have just announced predicted losses of between $160 and $165 million Australian dollars over the last 12 months.
In a stark contrast however, its short haul flights are proving profitable, but the downturn in its long haul flights provided by V Australia, is bad news for Richard Branson.
Another budget airline, Ryanair, have already announced that they are cutting flights from their UK airports and one hopes that V Australia doesn’t do the same.
Yet in a brave move the Virgin Group are playing the optimism card. They have committed to buying 30.5 million shares themselves in order to push up their percentage of the company from 25.5% to 30.2%.
This practice of ‘capital raising’ has already been used by the Australian airline Qantas, in order to offset it’s own losses on long-haul flights.
Sir Branson says: “Whilst the aviation world faces some tough market conditions, we have faith that Virgin Blue is well placed to meet the challenge with its strong brand and market position. Almost ten years since launch it still boasts the friendliest service in the sky and I remain committed to and very proud of it,”
Perhaps prematurely, Virgin Blue is predicting that the worst of the aviation gloom is over and that it will break even in 2010.
However, despite the optimism of the company, it is interesting to note that Brett Godfrey, the Chairman of the Virgin Group since 2000, chose to announce yesterday that he would be stepping down next year.
More than ever now, airline users are keeping their worried eyes to the skies.
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