Virgin Blue back in black and ready to add to fleet

MELBOURNE - Virgin Blue, Australia's second-largest airline, says it has reached an agreement "in principle" with Boeing to order as many as 50 737 planes after returning to profit in the first half.

The aircraft will bolster capacity on domestic routes, Brisbane-based Virgin Blue said yesterday.

The company, which operates Pacific Blue in New Zealand, posted net income of A$62.5 million ($80.4 million) in the six months ended December after a loss of A$101.4 million a year earlier.

Larger rival Qantas Airways has also ordered new aircraft as travel demand in Australia has avoided the worst of the global recession.

Virgin Blue boosted first-half profit and sales on domestic routes as capacity cuts offset a 1.1 per cent decline in passenger numbers.

"We plan to vigorously defend our core domestic markets," chief executive Brett Godfrey said.

The new 737s will be fitted with upgraded Boeing Sky Interiors and they will also benefit from fuel-efficiency and maintenance improvements, he said.

The company also said that it has drawn up a short-list of candidates to replace Godfrey, who plans to retire this year.

Godfrey helped set up Virgin Blue in 2000 with two planes and A$10 million from Richard Branson.

The company affirmed its forecast for annual pretax profit of between A$80 million and A$110 million.

- BLOOMBERG