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Scrap the tax says Virgin boss

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Virgin Australia boss John Borghetti says the best thing the government and Labor could do for airlines is to scrap the carbon tax and end the “age of entitlements” for business.

Virgin on Friday reported a first-half loss of $83.7 million as it fights to take market share from rival Qantas.

Mr Borghetti said he had no problem with the government repealing the Qantas Sale Act, to allow the rival airline to take on majority foreign ownership.

“(But) the best assistance the government and the opposition can provide is the removal of the carbon tax, which has cost this industry hundreds of millions of dollars,” he said.

“To that end, I just say we applaud the government’s position on this.”

Labor and the Greens are blocking the carbon tax repeal legislation in the Senate, but the government is hopeful the new Senate – which starts on July 1 – will help it pass the bills.

Mr Borghetti says he opposes the government providing a debt guarantee to Qantas.

“We have earned our right to exist,” he said.

“If Australia is to prosper in the age of globalisation, then the age of entitlements needs to go.

“Nobody is entitled to a certain percentage of the market – you need to work hard to get that.”

Mr Borghetti says Virgin has contributed $11 billion to the Australian economy, bolstered the tourism industry through co-operation with state and federal tourism bodies, brought prices down while improving service delivery, and created jobs.

“Why would any government or opposition consider setting us back?” he said.

Virgin’s loss of $83.7 million for the six months to December 31, compares to a $23 million net profit a year ago.

Revenue was up 6.4 per cent to $2.2 billion.

Virgin’s underlying pre-tax loss was $49.7 million – stripping out losses associated with its share in Tigerair Australia and $49.9 million of transformation and other expenses.

The company said that its costs rose by 4.5 per cent during the half.

That was blamed on fuel, foreign exchange and the impact of the acquired Skywest airline.

Adding to its costs were lower available seat kilometre growth (ASK) – a measure of how many seats on each flight are generating revenue – and the investment costs of trying to beat Qantas though improving customer experiences and attracting corporate and government passengers.

Virgin released passenger numbers for January this year, showing a 6.5 per cent increase and 3.3 per cent increase in ASK – 1.8 per cent ASK excluding Skywest – for domestic travel compared to January 2013.

Passenger numbers for international travel increased by 6.7 per cent and ASK by 0.8 per cent.

Virgin, like Qantas on Thursday, did not provide financial guidance for the second half, citing the uncertain economic environment.

 

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