The bruising battle for control of Virgin Blue’s majority owner is not slowing its recovery from two lacklustre years.

Virgin blue Model W445


When its latest financial results are announced, investors expected Virgin Blue to report a substantial boost in net operating income following successive months of improved loads and double-digit growth in year-to-year revenue passenger kilometres. Analysts predict Virgin Blue will report a net operating profit more than double its A$30 million ($23 million) result for the six months ending last September.

Virgin Blue’s recovery appears to be due to a better balance of capacity and demand – it slashed aircraft deliveries last year – and the growing success in attracting higher-yield traffic. Chief executive Brett Godfrey has described how Virgin Blue has evolved into what he calls a “new-world carrier” – an airline with low costs but with a network, interlining and higher service standards.

Meanwhile, Virgin Blue’s majority owner, transport conglomerate Patrick Corp, has won a major round in its fight to ward off a hostile takeover by rival Toll Holdings. Toll has agreed to sell a majority of Patrick’s shares in Virgin Blue to Richard Branson’s Virgin Group if its takeover succeeds, thereby restoring Branson’s control over the airline. But the Australian Competition and Consumer Commission (ACCC) ruled that Toll’s takeover “would be likely to substantially lessen competition”.

The side deal on Virgin Blue did not concern the ACCC: it was worried about the likely reduction in rail and marine competition between Toll and Patrick. Toll has refused to accede to the ACCC’s decision, so the commission plans to file a federal court action seeking to enforce Toll’s takeover. Toll Holdings says it will fight that action. ■

Source: Airline Business