Virgin Australia has warned that its earnings will be lower this financial year after the overhaul to its reservations system and because of a tough operating environment. The airline issued the downgrade on Wednesday night, shortly after a board meeting in Sydney. Virgin said its underlying pre-tax profits this financial year would be less than in 2011-12 when it recorded $82.5 million in profits before tax. It had originally forecast an improved performance on last year.
The airline said reduced revenue due to the overhaul of the reservations system earlier this year would not be able to be recovered in the fourth quarter. In January it replaced its Navitaire reservations system with one operated by Sabre, which resulted in the airline having to scale back services. You cannot escape from the fact that air fares in Australia remain far too low to turn a profit.
Virgin Australia issues profit warning
