The recent tourism bounce looked too good to be true – and it was.  Virgin Blue today slashed its profit forecast from $80m to $20m-$40m while warning of further airfare discounting to drive demand. “We have continued to see rapid deterioration and increased volatility in the operating environment, particularly the leisure segment both domestically and internationally,” the company said. “This is consistent with the weakening trend seen recently in the broader retail market as well as an unexpected decline in consumer confidence. The decline in demand has coincided with a period of increased industry capacity. We expect average fares to decrease by over 10% in line with the trend seen in recent BITRE data for discount economy fares.”

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