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SYDNEY - Virgin Blue's new trans-pacific airline, V Australia, will be profitable within two years, the carrier's chief Brett Godfrey says.
Virgin Blue yesterday unveiled the name and livery of its new long haul international airline, which was picked from nearly 6000 suggestions from the public including Randy
Roo Airlines, Rock My Socks Blue and Wedgie Airlines.
It plans to invest A$70 million ($77.6 million) to set up the carrier "over and above lines of credit that are needed to secure the aeroplanes", Godfrey said.
Virgin has already spent about A$2.2 billion to purchase six Boeing 777-300ER for V Australia, with the lease of a seventh taking the total cost of the fleet to A$2.6 billion.
V Australia plans to make 10 flights a week, with the airline pencilling in a take-off date some time in the last quarter of next year.
By taking on the lucrative Australia-US route, V Australia will go head-to-head with Qantas and US airlines United and Hawaiian Airlines.
Godfrey declined to outline specific routes or the estimated prices, saying more would be revealed at its full-year results briefing in August.
But asked when the new airline would be able to turn a profit, Godfrey said it would be trading in the black two years after take off.
"In the first year we're going to incur just at our own cost base in Virgin Blue, before we even start flying, somewhere around A$25 million.
"So those costs will certainly be exacerbated once the airline is up and running ... and we expect the first few months to be fairly heavy.
"But Australia, rest assured, you'll get some discounts around that period."
With 10 flights a week, V Australia would take about 12 per cent market share of the Australia to US market, Godfrey said. Qantas currently holds a 67.9 per cent share.
"It's not dramatic," Godfrey said.
"We're not looking to come in and really stampede the market because we've got limited capacity in the first instance."
CommSec senior industrial analyst Cassandra Meagher said a lack of information about routes and pricing made it impossible to assess whether V Australia could reach profitability in two years, or gain 12 per cent market share.
V Australia still needs US regulatory approval before it can get off the ground.
Virgin has received Australian regulatory approval from the International Air Services Commission (IASC) to offer 10 services a week to the US, as long as the airline hits the skies before November 30 in 2008.
Godfrey said it was unclear just how long it would take to get the nod from the US regulator.
"The Australian government through the IASC, which is our bilateral negotiating team, have said that they believe that [10 flights] is an appropriate number," he said.
"Now we have to wait for the US to come back. The timeline on that could be weeks or months. We just don't know."
Virgin Blue shares rose A10c, or 4.5 per cent, to A$2.32.
- AAP
