VBA virgin blue holdings limited

macq research

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    This notes are some parts of Macquarie Private Wealth


    What a turnaround!
     Just three weeks after guiding the market to the lower end of its previously stated FY10 $80-
    $120m PBT range, VBA has revised its FY10 guidance to $20-$40m, a substantial downgrade
    implying 2H10 has gone from an expected break-even to a $40-$60m loss.
     How is this possible? We struggle to comprehend just how much conditions have deteriorated in
    the past three weeks since prior guidance an implied $40-$60m swing on the final six weeks
    expected revenues of ~$300m seems excessive. We suspect previous revised guidance could
    only have been overly optimistic in factoring in a strong rebound at the back of June.
     Still tough for V Australia. Certainly V Australia continues to lose money, with economy class
    return fares on the US route recently falling back below the ~$1,000 level. Although inbound
    demand from the US is improving, VBAs disproportionately low inbound market share relative to
    its competitors means it would not be seeing this benefit.
 
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