Virgin Australia has revealed it will have to reduce flights and capacity following on from the news that the airline’s full-year underlying earnings would be $100 million below last year’s result.

In an update to shareholders the airline blamed rising fuel costs and challenging market conditions for the predicted loss and said if weak demand continued, the loss could be even higher.

The update said the outlook reflected the uncertainty in the domestic market and a $160 million impact from high fuel prices and foreign exchange movements.



According to a report in the Sydney Morning Herald, lower performing routes will have to be trimmed back.

Cities affected by the flight reductions include Perth and Canberra while regional centres affected include Kalgoorlie in WA Ballina in NSW and Proserpine in QLD.

Virgin Australia’s Chief Executive Paul Scurrah has confirmed that in May and June alone there would be a retraction of 1.5% in capacity across the network.

“While we have continued to grow revenue, this announcement shows that our business needs to become more resilient to challenges such as weaker demand, high fuel prices and foreign exchange environment,” Paul Scurrah said.

“There is a lot of work being done to develop our new strategy that will help position the group for long-term success. In the meantime, we are focused on short-term improvements”.

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