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Business Description: Virgin Australia Holdings Limited (VAH, formerly Virgin Blue Holdings Limited) established itself as a low-cost carrier under the new brand 'Virgin Australia' for both domestic and international airlines. VAH provides inbound and outbound services between Australia and overseas, with key geographical areas being New Zealand and USA.
Strategy Analysis: VBA launched its business in Australia as a full service operator looking to provide travelers an alternative to QAN which has been such a dominant carrier in the country. However the company has found going tough in the leisure segment with the introduction of QAN's low cost carrier Jetstar. The focus is now on moving up the yield curve by targeting the business end of the market. Certain sectors like the Sydney-Perth sector will see a rise in capacity as the company looks to deploy wide body aircraft to mainly cater to business customers. The company says that every percentage point improvement in yields will have a dramatic effect on the bottom line. VAH has also created a virtual international network by forging alliances with international carriers like Air New Zealand, Etihad, Delta and Singapore Airlines. These alliances will feed traffic into and out of Australia enabling both leisure and business passengers a viable option to QAN. In addition VAH will not need to invest in expensive aircraft resulting in lower capital expenditure and hopefully better returns. Perhaps the most important and significant tie-up is with Singapore Airlines given its brand image amongst business travelers and its footprint in Asia.
Virgin Australia Holdings reported NPAT down 56% to $23.0m for the half-year ended 31 December 2012. Revenues from ordinary activities were $2.11bn, up 5% from the same period last year. Basic and Diluted EPS was 1.0 cent compared to 2.3 cents last year. Net operating cash flow was $42.6m compared to $253.5m last year. No dividend was declared.
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The Age 24/05/2013 |
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The Age 24/05/2013 |
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The Age 24/05/2013 |
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The Age 24/05/2013 |
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