Virgin Australia shares are taking a bath on the market, down around 6%, after updated earnings advice from the company warning of a loss after tax in the region of $100 million.
The company is blaming weaker economic conditions and the effects of the carbon tax, along with some significant restructuring and investments which the company says positions it better for the year ahead.
Chief executive John Borghetti said: “Although today’s update is disappointing and notwithstanding a challenging environment, we have made significant progress on the execution of our Game Change Program. We now have the right platform in the Australian market to generate sustainable earnings benefits.”
Costs included the change to the a new booking and check-in system, and the acquisition of Skywest Airlines Ltd and 60% of Tiger Airways.
The pre-tax costs of the carbon tax were estimated at $45 million to $50 million, the company said.
The Company today also confirmed that the pre-tax costs of the carbon tax for the 2013 financial year are estimated to be between $45 million to $50 million and were unable to be recovered due to weak economic conditions and the competitive environment.
“As a result of these factors, Virgin Australia expects a statutory Loss After Tax in the range of $95 million to $110 million,” the company said.
But the company says yields are increasing and bookings levels are up so far on this time last year.
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