Virgin Blue seeks US$190m to head off record losses

Virgin Blue seeks US$190m to head off record losses

Virgin Blue is looking to raise AU$231 million (US$190 million) in a heavily-discounted share sale after warning today that it was likely to post a full-year loss.
Australia’s second-largest airline said the funds would help boost its coffers after this year suffering the worst operating environment in its 10-year history.

It is set to post a loss of A$160-165 million for the year to June 2009, down from a profit of A$98 million a year ago.

Chief Executive Brett Godfrey, who has led the company from launch, also announced that he would be stepping down in 2010 as he felt he had given the airline enough “blood, sweat and tears” over the past decade.

“After more than 10 years, it will certainly be time for someone else to come and have a go,” he said.

Describing the fund raising he said: “These are the worst of times we’ve had in a long time.” He said the size of the capital raising factored in market conditions lasting well into next year. The money would also strengthen Virgin Blue against any new competition and ahead of a short-haul fleet renewal starting in 2011.

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The airline needs to replace 12 Boeing 737 planes as their leases expire in 2011 and another dozen planes in 2012.

Richard Branson’s Virgin Group has agreed to invest up to AU$80 million. If retail investors do not take up their entitlements, Virgin Group’s stake in Virgin Blue would increase to 30.2%