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http://business.smh.com.au/virgin-bringing-toll-down-for-a-bumpy-landing-20080624-2w7p.html

Virgin bringing Toll down for a bumpy landing
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It may be time for the transport group to hit the ejector button on its aircraft holding.

AS PETROL prices climb sky-high, investors are becoming increasingly twitchy about Toll Holdings and its investment in the airline Virgin Blue.

Shares of the transport and logistics company have slid 45 per cent since the start of the year and there's not much relief in sight, according to analysts at ABN Amro. The broker cut its 2008-09 profit estimate for Toll by 8 per cent, pointing to the FedEx experience in the US, where the slowing economy and skyrocketing fuel costs have eaten into operating margins.

With the 63 per cent stake in Virgin Blue a drag for Toll's earnings and share price, the analysts reckon it would be logical for Toll to press the ejector-seat button.

Given his problems in selling the airline holding, managing director Paul Little could instead look at making an "in specie distribution" - distributing the stake to shareholders by giving them one new Toll share and 0.63 Virgin Blue shares for every Toll share they own.

The move would surely get the carrier's debt burden off Toll's books, remove the overhang from its shares and offer investors a pure logistics stock.

Still, it may not make Little the most popular bloke, leaving it up to shareholders to figure out what to do with the Virgin Blue shares. They have already lost 75 per cent in market value this year.

And Toll's investors could well spark another round of sell-offs, ABN Amro said.