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Struggling Virgin Australia explains odd share blip

February 12, 2014 Aviation, Headline News No Comments Email Email

egtmedia59Virgin Australia has slid further into the red, flagging a loss of AUD 49 million for the first half of the financial year.

The guidance comes months after the airline reported a AUD 98 million loss in the 2013 financial year.

The ferocious battle for domestic market share is hurting both Virgin and Qantas. Qantas recently flagged a AUD 300 million first-More-fun-in-the-Philippines_250X250pxhalf loss. Credit rating agencies subsequently took a dim view and downgraded the much-vaunted Qantas credit rating to junk status.

Virgin says it expects to post a before-tax loss of AUD 49 million for the six months to 31 December 2013, which would compare to a AUD 61 million pre-tax profit in the previous corresponding period.

Ironically, Virgin’s share price rose, as some analysts had feared a worse forecast.

In a peculiar aberration which casts some light on the curious workings of the stock market, Virgin’s share price dipped suddenly before the forecast. Virgin said the blip was became some investors may have mistaken Virgin Australia stock for Virgin Atlantic. Virgin Atlantic announced last week it will pull out of serving Australia because of declining revenues.

“We have received feedback that this has caused some confusion in the market with people mistakenly assuming that Virgin Atlantic is the same entity as Virgin Australia,” the company said.

This would indicate that some people invest in airline stocks without being able to tell one airline from another.

Written by : Peter Needham

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