Virgin waits to assess true cost of ash cloud

Virgin waits to assess true cost of ash cloud

As Virgin Australia plans to resume all flights to Bali as the volcanic ash cloud hanging over Indonesia disperses, the financial impact of the disruptions remains to be seen.

Chief executive John Borghetti declined to say how much the ash cloud created by Mt Rinjani’s eruptions earlier this month has cost the airline in lost business and flight cancellations so far.

“We don’t want to put a number on it just yet simply because it hasn’t finished,” Mr Borghetti told reporters at the company’s annual general meeting on Wednesday.

“By the half year results hopefully this will all be over and we will be able to put a number on it. But it is obviously costing us money.”

The airline’s latest alert to travels says it expects to resume all flights between Australia and Denpasar Airport, Bali on Thursday depending on whether the favourable flying conditions continue.

It has been flying from Bali to Australia when conditions are safe in the past few weeks but all flights from Australia to Bali have been cancelled.

This is the second time this year flights to Bali have been disrupted by volcano eruptions, first in July from Mt Raung, and then on November 2 from Mt Rinjani.

Mr Borghetti said this has not changed the group’s plans for its low cost carrier Tiger Air to begin flights between Australia and Bali in March next year.

“Forward sales for Tiger are looking very good – in fact they are ahead of our expectations,” he said.

“I do believe Bali will bounce back very quickly. It has in the past.”

Virgin will also add 75,000 seats on its trans-Tasman routes from late March in conjunction with its alliance partner Air New Zealand.

Mr Borghetti told shareholders the group is on track to return to profit in 2016 and unveiled plans to increase capacity on its trans-Tasman routes.

In August, Virgin reported a full year loss of $93.8 million, an improvement on the $353.8 million loss suffered in 2013/14. It made a $1.7 million profit in the first quarter of 2015/16.

 

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