|
Virgin Blue's earnings upgrade last week won upgrades yesterday from two leading investment banks and brokers.
In a statement,
the airline said it estimated its net profit before tax and exceptional
items at between $80 and $110 million for the year to June 30, compared
with a loss of $93 million a year earlier.
Virgin Blue's previous guidance was for a "return to profitability" this financial year.
The shares ended steady at 55c. Yesterday they edged up 1.5c to 56.5c
Analysts at Goldman Sachs JBWere said they had "revised our earnings
estimates for VBA to reflect a swifter than expected recovery in
domestic yields, as well as an improved outlook for V Australia given
its recent strength in load factors and apparent yield improvement.
"VBA has clearly benefited from a recovery in demand for domestic air travel (particularly in 2Q10).
"This is the majority of VBA's business and is more than offsetting the likely earnings drag from the ramp-up of V Australia.
"We note that load factors on V Australia services to LA have ramped up
significantly over the last year, while airfares on that route have
also shown some signs of improvement.
"VBA may also benefit from the decision around the Federal Government
Air Travel Tender (combined domestic/international ~$500m) which we
expect to be announced in the near term."
And a second bank, RBS said in a note to clients that "(VBA) Management
has upgraded FY10 earnings guidance to A$80m-110m pre-tax profit
(before exceptional items) due to improving operating conditions in the
form of some yield recovery, but also a lower fuel cost in the 1H
(US$92/bbl compared to US$127/bbl last year).
"This is a significant improvement on the underlying loss of A$24.6m recorded last year (FY09).
"Management continues to paint a cautious picture for the remainder of
FY10 given volatility in the markets, but we note the increasingly
positive tone of outlook commentary and we see conditions continuing to
strengthen.
"We therefore wouldn't be surprised to see the FY10 result come in at least towards the top end of the guidance range.
"Given improving operating conditions we recently upgraded our FY10
pre-tax profit forecast to A$110.2m, at the top end of the current
guidance range.
"We therefore make no changes to our forecasts, preferring to stay at
the top of the range given our view that operating conditions (and
therefore yields) should continue to strengthen over the remainder of
the year.
"We do expect consensus earnings upgrades though; given Bloomberg
consensus for pre-tax profit was A$74.0m prior to the announcement.
"Given improving operating conditions we recently upgraded our FY10
pre-tax profit forecast to A$110.2m, at the top end of the current
guidance range.” This Information is provided to you by the Australasian Investment Review (AIR).Subscriptions are free.AIR reports about financial markets and investment products in the widest sense possible. The AIR website and all its contents is prepared for general information only, and as such, the specific needs, investment objectives or financial situation of any particular user have not been taken into consideration. Individuals should therefore talk with their financial planner or advisor before making any investment decision.
|
