By Scott Rochfort

March 30, 2005

Virgin Blue has rejected speculation its New Zealand-based subsidiary, Pacific Blue, could be losing up to $10 million a year.

Just days after issuing its third profit warning since last August, the discount airline has also scotched suggestions it plans to scale back Pacific Blue`s fleet of three Boeing 737s, saying the subsidiary is in the ``black``.

The airline said a recent Goldman Sachs JBWere research note, which estimated the subsidiary was losing about $5 million to $10 million a year, was wrong.

``Pacific Blue is in the black and, from the comments and actions of the other carriers, is probably one of the few to be operating profitably across the Tasman,`` Virgin Blue spokesman Heather Jeffery said.

``There are no plans to scale back Pacific Blue. After just 12 months, Pacific Blue has exceeded our expectations and the team in New Zealand has done a great job in establishing and building the business.``

The airline declined to say how profitable its trans-Tasman offshoot was.

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AdvertisementSince launching its first services between Australia and Christchurch in January last year, Pacific Blue has expanded into Vanuatu, Fiji and the Cook Islands.

Still, some analysts believe the airline has not grown as quickly as first expected.

Pacific Blue is also filling a lower percentage of seats on flights between New Zealand and Australia compared to Qantas and Air New Zealand.

Virgin Blue chief executive Brett Godfrey declined to speak to the Herald yesterday on whether he intended to stay at the airline when Patrick Corp boss Chris Corrigan assumed management control.

Jetstar chief executive Alan Joyce was more forthcoming after turning down a possible opportunity to head Irish carrier Aer Lingus.

The Irish-born Mr Joyce, who became an Australian citizen two years ago, said he had an ``emotional attraction`` to Aer Lingus, where he started his career. But he said he wanted to stay in Australia because he liked the ``lifestyle and people here``, and wanted to see out his role overseeing Jetstar`s national expansion with a fleet of 23 A320s.

Aer Lingus is on the lookout after its chief executive, Willie Walsh, was chosen to replace Australian-born Rod Eddington as British Airways` boss.

The two top contenders for the job are the former finance director of low-cost carrier easyJet, Australian Chris Walton, and the former chief of low-cost airline Go, American-born Barbara Cassani. Mr Walton has worked for Qantas and Air New Zealand.

Meanwhile, Jetstar has signed-off on plans to hire out portable Digeplayers on services by June.

Jetstar will charge passengers $5 to hire the players on short-haul flights. The devices will store 10 movies, eight sitcoms, music videos and audio tracks.

Jetstar says the portable devices will be more cost effective than Virgin Blue`s plans to install cable TV sets in the back of seats.

Virgin Blue, however, says it will have more success by offering passengers live TV programs and news on flights.