Virgin Australia expects full year loss of up to A$110m

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Virgin Australia has warned that it expects to record a net loss of up to Australian dollars (A$)110 million ($97.5 million) for the year ended 30 June 2013.

In a statement to the Australian Securities Exchange, the carrier says it expects the full-year loss to come in between A$95 million and A$110 million, driven by difficult economic and competitive conditions, carbon tax costs and pre-tax restructuring charges.

In comparison, the airline recorded a net profit of A$22.8 million for the 2012 financial year.

This year, the carrier will record a A$100 million charge for transformation related to the implementation of the Sabre computer reservations system, and the acquisition of regional carrier Skywest Airlines and a 60% stake in budget airline Tigerair Australia.

The airline says that the result also takes into account an operating loss of A$5-10 million from Skywest, "reflecting the investments being made in the business to facilitate rapid growth".

In addition, the carbon tax would cost it A$45-50 million this year as the weak operating environment and competition in the domestic market made it difficult for the carrier to recover that amount through earlier fare initiatives.

Despite the downbeat forecast, chief executive John Borghetti says that the airline has been experiencing stronger performance in recent months.

"The preliminary results for June and July indicate positive trends in both yield and loads, demonstrating our strength and momentum building into 2014 financial year," he says.

Meanwhile, Virgin also announced that it will increase fares and fuel surcharges across its network from 22 August as a result of the weakening of the Australian dollar pushing up its fuel costs by 13%.

The airline will increase domestic and short-haul international fares by 3%, while fuel surcharges on international services will increase by A$25 to A$65.