Virgin profits soar
A Report in The Australian says that Virgin Blue executives came under fire this week from shareholders angry over the airline’s modest dividends, even as the company’s profits skyrocketed.
The airline announced at its annual general meeting in Brisbane that it had nearly doubled its net annual profit in 2006-07, declaring a bottom line result of $215.8 million.
Chief executive Brett Godfrey’s annual remuneration for that financial year was $1.99 million, but this did not sit well with a few vocal shareholders who were unhappy that the company’s most recent dividend payout was only 2c per share fully franked.
The previous dividend, distributed in March this year, was also 2c.
Several shareholders recalled that the company had paid a dividend of 25c in December 2005 after listing in 2004.
Responding to criticism over the dividend, Mr Godfrey said: “I think if we kept paying out at 25c per share we probably wouldn’t be here.
“That was an exceptional situation … and we do clearly have some requirements of cash.” Mr Godfrey pointed out that $3 billion worth of aircraft had been ordered and “we’re not in a position today to say how they’ll be financed”.
“Prudence has dictated (the dividend payout and) this was an amount the board felt comfortable with,” he said.
Mr Godfrey said the amount of the dividend payment would be reviewed by the company on a regular basis.
He also flagged the possibility of Virgin raising its ticket prices in response to the soaring cost of jet fuel, adding, “Fuel does continue to challenge the industry … prices continue to be very high and volatile,” he warned.
“It’s at levels no one expected to see for a long time and something’s got to give,” Mr Godfrey said.
Fuel prices contributed to a 9.3 per cent rise in Virgin’s total operating costs, to $1.84 billion, with a total annual fuel bill of $489 million.
Mr Godfrey said fuel prices were now four times more expensive than they were when Virgin was launched seven years ago.
A Report by The Mole
John Alwyn-Jones
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