Ferret's Stock to Watch: VIRGIN BLUE HOLDINGS LIMITED08:46,...

Ferret's Stock to Watch: VIRGIN BLUE HOLDINGS LIMITED
08:46, Friday, 15 December 2006

AN AIRLINE COMPANY THAT IS NOW FLYING HIGH

Sydney- Friday - December 15: (RWE Aust Business News)
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OVERVIEW
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Ferret has suggested investors examine Virgin Blue (ASX:VBA) a
number of times this year.

He hasn't been wrong because the shares have been slowly
improving as the company moved from one major player to another.

Traders' confidence has been higher this week after Virgin
estimated its reported profit after tax for 2006/07 will be in excess of
$158 million, a 40 per cent increase on the previous corresponding period
result of $113 million.

The revised forecast follows an improvement in market conditions
and the airline's performance as a result of initiatives under its New
World Carrier strategy launched last year.

The company also advises that as a result of the better outlook
and finalisation of the Long Haul Feasibility Plan, the board has
confirmed its in-principle support for an international wide-body
operation.

The planning and implementation phase of this venture will now
be expedited and, subject to conditions such as regulatory approval, the
granting of adequate bi-lateral access and conclusion of aircraft
negotiations, the airline expects to launch international long-haul
operations by late 2008.

The company will provide a detailed progress report at the
half-year results announcement in February, directors disclose.

In the meantime Toll Holdings (ASX:TOL) has completed its initial
review of its 62 per cent investment in Virgin Blue, which was acquired
as part of the successful completion of the Patrick Corporation
acquisition earlier this year.

Toll managing director Paul Little said the review had confirmed
the company's view that the investment offered further value enhancement
for Toll shareholders and that this will remain the company's focus.

Mr Little pointed to a number of current and planned initiatives
which should generate additional and material value.

"The introduction of an active fuel hedging program, the
Velocity frequent flyer program, live inflight TV, redeveloped customer
lounges and extensions of self-service customer offerings are all having
a positive impact on the business," Mr Little said.

He added that the recent announcement of the introduction of the
Embraer aircraft showed Virgin's ability to innovate in an industry
which lacks steep changes in innovation.

"The addition of the Embraer to the fleet, together with the
potential trans-Pacific international long-haul service, offers Virgin
some exciting prospects," Mr Little declared.

Toll is also close to completing its air freight strategy, which
is likely to include a pivotal role for Virgin Blue, again enhancing
earnings flow.

"Toll intends to maintain a high level of involvement at board
level and continue its support of Virgin Blue management, which is
performing extremely well," Mr Little said.

Toll will complete a further review around the end of the 2007
financial year, Mr Little disclosed.

SHARE PRICE MOVEMENTS
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Shares of Virgin Blue yesterday rose 9c to $2.27. Rolling high
for the year has been $2.38 and low $1.50. The company has 1 billion
shares on issue with a market cap of $2.38 billion.

The company has also issued a summary of operating statistics
for October which showed a 10 per cent increase of the same period in
the previous year.

Domestic and international operations of Virgin Blue, excluding
Polynesian Blue, measured by revenue passenger kilometres increased by
11.2 per cent while capacity, measured by available seat kilometres
increased by 5.7 per cent over the same period.

Revenue load factor increased by 4.1pts over the previous year.

Passenger numbers for the four months to October increased by
13.2 per cent from the previous year. RPKs increased by 12.6 per cent,
while ASKs increased by 5.7 per cent over the same period.

Revenue load factor increased by 5pts to 77.1 per cent compared
to the previous year.

BACKGROUND
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Virgin Blue joined the Australian Stock Exchange list in
December 2003.

The company emerged from Sir Richard Branson's Virgin Atlantic
which is the second largest international airline based in the UK.

Flying to 26 destinations worldwide, Virgin Atlantic launched
into the Australian market in December 2004 with daily flights from
Sydney to Hong Kong and London.

Australia's low-fare airline Virgin Blue and regional carrier
Regional Express (Rex) joined forces to provide regional travellers with
a convenient and cost-effective method of flying around the country.

It tied in with United Airlines's daily direct services from
Sydney and Melbourne to both San Francisco and Los Angeles with
convenient connections to over 210 US cities.

In a period when Branson's group was strapped for cash, Patrick
Corporation grabbed control.

During the takeover battle for Patrick Corporation, Branson
tried to do a deal with Toll's Paul Little who reportedly promised to
give Branson back control.

However, Little had second thoughts because the airline was
showing its best form ever and is making profits which will now go to
Toll shareholders.

In October, Polynesian Blue Airlines celebrated its first
birthday with a super seat sale to Samoa.

The airline, a joint venture between Virgin Blue and the
Government of Samoa, has played a key role in stimulating tourism and
economic growth in Samoa following 12 successful months in the market.

Virgin Blue operates a fleet of 53 Next Generation Boeing 737
aircraft.

The company says it is constantly looking at ways to improve its
On-Time Performance.

ENDS

Copyright © 2006 RWE Australian Business News. All rights reserved.