Virgin profits slump following battle for domestic travellers: Midday roundup

Virgin Australia profits have slumped by more than half in the six months to December, with the airline reporting a net profit after tax of 56% to $23 million, down from almost $52 million.

Virgin has been fighting Qantas for customers in the domestic market and consequently its domestic pre-tax earnings fell by $39 million to $49 million for the half because of heavily discounted of fares.

The company also said it suffered a $24.4 million impact from the carbon tax.

The airline plans to boost its number of domestic travellers by 5% to 7% in the second half, by increasing flights between Brisbane and Perth from May using Airbus A330 planes. The company is also beginning to fly between Brisbane and Moranbah and Bundaberg.

Despite the struggles in the domestic market, the airline was aided by its international operations, which were boosted by 9% to $35 million following alliances with international airlines Etihad and Singapore Airlines.

Flight Centre profit jumps 13%

Travel agent Flight Centre has posted a net profit of $91.6 million for the first half of the year, up 13% on the previous corresponding period.

Despite the increase, Flight Centre shares were down 3.9% at 11.50am.

The company declared a fully franked dividend of $0.46 a share.

The company looks to be on track for its full year profit aim of $315 million before tax, up from $305 million, as its growth outlook is now marginally ahead of its target.

Berlusconi spooks market

Australian shares fell this morning following fears of European instability with former Italian prime minister Silvio Berlusconi’s strong election result.

At midday the S&P/ASX200 benchmark was down 42.9 points to 5012.9.