Virgin Blue's Pacific venture on the line

BRISBANE - The first casualties from Patrick Corporation's majority stake in Virgin Blue Holdings are expected to be super-cheap airfares and the airline's foray into the Pacific.

But analysts say the new regime might not be able to trim much else off the budget airline.

The market expects a "new-look" Virgin Blue will have to position itself between Qantas and its subsidiary Jetstar and become more freight orientated.

Intersuisse manager of research Peter Russell said he expected Patrick managing director Chris Corrigan to take a more commercial approach.

"I'm sure Mr Corrigan would not want to offer fares at A$9 or even A$1," he said.

"It's not his style I wouldn't think and it's not most peoples' style to give away profits to just keep flying."

Corrigan will also probably target Pacific Blue, which flies to New Zealand, Fiji and Vanuatu.

"Pacific Blue's future is either you keep doing it, or shut it down," said one analyst who did not want to be named.

"You can't make it smaller ... and as it is, it's not making any money."

Analysts also believe Virgin Blue chief executive Brett Godfrey may be forced out.

Mr Godfrey's office did not return calls yesterday.

Patrick last Friday announced it had won control of just over 50 per cent of the company.

In January the logistics company, which then owned 45.4 per cent of the airline, launched a A$1.1 billion ($1.18 billion) hostile bid for the Brisbane-based airline.

With the bid extended for another two weeks, analysts expect Patrick's share of Virgin Blue to increase as short-term speculators, who had punted on an increase on January's A$1.90-a-share offer, start bailing out.

Sir Richard Branson's Virgin group still holds 25.5 per cent of the company but it is unclear if he will sell.

Analysts believe Virgin Blue is already a lean operation and affected by costs beyond its control.

"The biggest costs are fuel - you can't affect that; airport landing charges - you can't affect that; leasing charges - you can't do anything about that; and labour," one analyst said.

"It's pretty lean. I don't know that there's much else they can do with the Virgin Blue cost base."

Patrick has said it would begin a review of Virgin Blue as soon as possible.

- AAP