Virgin revenue takes a plunge
An article in The Herald Sun says that the grim outlook confronting Virgin Blue has been compounded by new traffic numbers that prove the carrier’s lacklustre performance.
The figures showed Virgin’s revenue load factor – a measure of the number of seats bought by fare-paying passengers – slumped by a combined 8.2 per cent during April and May.
The revenue drop occurred despite passenger numbers rising above the loads the airline carried during the corresponding two months last year.
Qantas also reported a similar trend in April, although its seat factor revenue came in slightly higher than Virgin Blue, at 79 per cent compared with Virgin’s 77.2 per cent.
Nevertheless, Qantas also incurred a 1.8 per cent revenue slip in April compared with Virgin’s 4.9 per cent fall.
The effect that higher than expected fuel prices continue to have on the operating performance of both carriers is clearly obvious.
As revenues softened during those same two months, the price of jet fuel soared, rising from $US125.38 to $US160.75 on May 30.
Virgin, whose shares have been in free fall since June last year when oil prices began to rise, has already announced a range of measures to combat the crisis.
Managing director Brett Godfrey is cutting $50 million in operating costs, raising ticket prices as well as aircraft retirements and route cuts.
Qantas also responded with a similar range of measures, having trimmed operating capacity by 9 per cent by cancelling services and retiring aircraft.
This week, the national carrier also decided to remove its aged and fuel-guzzling four-engine Boeing 747-300 jetliners from the Melbourne-Perth service.
The planes will be replaced with brand new and fuel-efficient Airbus A330-200 series aircraft — the same planes that used to fly the Melbourne-Shanghai route.
But irrespective of these measures, both Qantas and Virgin Blue see no let-up.
Crude oil rose again yesterday to $US140.97 a barrel in New York which is certain to cause further pain for the airlines by pushing the price of refined jet kerosene even higher.
Jet fuel traded in Singapore, the benchmark for airlines in the Asia-Pacific region, was at $US171.75 a barrel on Tuesday.
Qantas shares yesterday closed down 9c at $3.15. Virgin Blue shares closed up 1c at 50.
A Report by The Mole from the Herald Sun
John Alwyn-Jones
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