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Virgin Australia Blames Carbon Tax for Financial Woes

Virgin Australia logoThe airliner Virgin Australia updated its financial guidance for the year ended June 30, 2013, indicating that the carbon tax, among other things, was having a negative impact on the company’s performance.

The company said the pre-tax costs of the carbon tax for the 2013 fiscal year were between $40 million and $45 million, and the costs were unable to be recovered due to a weak economic climate. Virgin shares dropped 4.4 percent on Monday after the company posted its new guidance on the Australian Securities Exchange, according to the Courier Mail.

In addition to the carbon tax, the company cited a difficult and competitive environment and restructuring costs as contributing to its expected loss of between $85 million and $98 million for the 2013 fiscal year. The company is implementing a new booking and ticketing system and acquired Skywest Airlines and a majority stake in Tiger Airways.

As for the carbon tax, the airline’s CEO John Borghetti told reporters that a weak local economy and strong competition had made it impossible to recover the cost of the tax in higher ticket prices, according to the Courier Mail. Virgin also announced an increase to fares and international surcharges to offset increasing fuel costs, which it said had risen 13 percent in the past two months.

Meanwhile, Australian Opposition Leader Tony Abbott promised that if he is elected on Sept. 7, one of his first priorities will be to scrap the carbon tax, according to the AAP. Speaking to a group of workers at a meatpacking plant, Abbott said the facility was “under direct threat from the carbon tax” instituted last year by the federal government, reported the APP. If the Labor party retains control, it plans to adjust the carbon tax from a fixed pricing scheme to a floating, market-based emissions trading scheme.

In other carbon-tax related news, UK-headquartered, coal-fired power producer Drax said the carbon tax contributed to its earnings falling 22 percent in the first half of 2013, according to the Yorkshire Post. Since the EU ended its free carbon allowances for utilities, Drax had to pay $107 million for EU carbon allowances, compared to the $58 million it had to pay last year for the permits.

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4 thoughts on “Virgin Australia Blames Carbon Tax for Financial Woes

  1. On the one hand Branson harps on about “screwing business as usual” and when governments introduce policies to change business as usual his companies “cry to mummy”. Shameful hypocrisy and my heart truly bleeds for you…

    …sighs loudly

  2. Regarding Virgin Australia (and any other airline for that matter), it will likely be impossible to recoup carbon taxes through increases in base air fares. So the solution lies, as it does with other taxes, services, etc that airlines are charging for, is in a separate taxable line item. I assume the tax is not variable among airlines, so there’s no advantage one airline would have over another that way. Nobody likes additional taxes/fees on purchases, but ultimately the costs for carbon will need to be absorbed by consumers, the users of airline services.

  3. Old King George would be proud of you guys.
    Imagine being able to tax the very air you breath. Makes the old tea tax look like nothing.
    Tell me again what good the tax does?
    Good bye jobs.
    Maybe killing jobs will reduce petrol carbon, but so what?
    All petroleum carbon came from plant and animal deposits, which got that carbon from the atmosphere. So, all carbon came from the atmosphere!
    Tell me again how returning some carbon to the atmosphere from where it came, causes harm?
    Besides:
    Global warming has been proven to be a HOAX.
    So, you guys work for the King?

  4. … OK, CO2GOOD, I’ll tell you again ….
    “returning some carbon to the atmosphere from where it came, causes harm” because the carbon found in fossil fuel deposits took literally millions of years to be sequestered there from the atmosphere – and by taking it and burning it within a mere 100 or 200 years guarantees that extreme climate changes will be occurring in similarly short time scales. That’s why they’re called ‘fossil’ fuels, sport.
    Global warming has not been “proven to be a hoax”. How you love to throw around such charges with absolutely no evidence to back them up. And on the contrary, climate change assertions come from nearly the entire scientific community; and is backed with reams of evidence that regularly gets published in peer-reviewed journals and that regularly gets reproduced and confirmed by other scientists. You know, the evidence that you and other denier trolls continue to ignore and to dismiss as though none of it matters in the least. Yea, all THAT evidence.

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