Picture: REUTERS
Picture: REUTERS

SYDNEY — Virgin Australia Holdings, the country’s second-largest carrier, posted first-half profit on Tuesday that missed analysts’ estimates amid a fight with Qantas Airways and the effect of a carbon tax.

The shares slumped.

Net income dropped 56% to A$23m ($24m) in the six months to end-December, the Brisbane-based company said in a statement on Tuesday. That missed the A$50m median of six analysts’ estimates compiled by Bloomberg News.

The profit decline puts pressure on CEO John Borghetti’s plans to challenge Qantas’s 65% share of Australia’s domestic market by winning corporate travel accounts. Virgin, which sold a stake to Singapore Airlines last year, is seeking to buy Tiger Airways Holdings’s Australian unit and regional carrier Skywest Airlines as part of a strategy to build on alliances.

"The shine that Virgin’s had over the last 18 months or so is starting to wear off," Evan Lucas, a strategist at IG Markets in Melbourne, said.

"It’s stuck in the middle and is buying a competitor that’s basically going to mean competing with itself."

Virgin Australia fell 5.8% to A$0.41 at the close in Sydney on Tuesday, its biggest fall since August 31. The stock has dropped 2.4% over the past year, compared with the benchmark S&P/ASX 200 index’s 17% gain.

The introduction of a carbon tax in Australia cost the airline A$24.4m in the half-year, which it could not recover from air fares because of "aggressive competition", the company said.

The airline also said it had borne costs of A$36m to train staff on a new booking system and to write down assets.