Toll to stick with Virgin Blue

Toll Holdings’ Managing Director Paul Little has said that the Company was happy to maintain its investment in Virgin Blue.

Speaking after the Company’s AH GM yesterday, Mr Little said Toll would retain its 63% holding in Virgin Blue and hopes to detail its plans within the next few months adding  “The Virgin Blue business is an excellent business and its contribution now, in an environment where jet fuel prices are coming off, is going to be even more significant.”

In the AGM Mr Little said that Toll supported Virgin management and moves to add value to Virgin Blue for the benefit of Toll shareholders, with the airline contributing only $700,000 in after-tax earnings since Toll took control of it and other Patrick Corp assets on May 11.

With the result in line with expectations, Mr Little added that seasonal factors and high jet fuel prices had depressed earnings and that Toll was exploring various methods of increasing return from the investment, including introducing flights to Los Angeles and that while the current Virgin fleet was not suited to air freight, the airline was considering the introduction of small specialist and quick-change aircraft that could be used for passengers during the day and freight at night.

Earlier this week, Virgin Blue CEO Brett Godfrey had confirmed that the airline had been speaking to Brazilian manufacturer Embraer about smaller regional jets, stressing though that nothing should be read into the discussions and said it would be disconcerting to have to introduce smaller aircraft at the same time that Virgin was hoping to start long-haul operations, with Mr Godfrey adding said the freight operation would probably be a joint venture with Toll.

He added “We have a dedicated team looking at freight, because we genuinely believe there’s a good opportunity there, but we’re not honestly in a position to express exactly how it will work,” adding the airline would be better placed to comment in February.

Securing the aircraft for its new USA service may also prove difficult in a tight aircraft market with Virgin currently looking at the Airbus A340-600 or the Boeing 777-300 with talks taking place with manufacturers, leasing companies and sister airline Virgin Atlantic about availability.

With an announcement regarding the USA operation expected before Christmas, Brett Godfrey’s handing of all current projects is also said to be the key to how long he will stay at the controls, with his original three-year undertaking to remain at the airline ending at Christmas and his being on a six-month rolling contract.

Report by The Mole