Virgin Australia this week updated its financial guidance for the financial year ended June 30, 2013. The airline cited the carbon tax among other factors that have contributed to the company’s anticipated losses. The company confirmed that the pre-tax costs of the carbon tax for the 2013 financial year were estimated to be between AUD $45 million and AUD $50 million. Such costs could not be recovered due to weak economic conditions and the competitive environment. John Borghetti, CEO told reporters “It (the cost of the carbon tax) is simply not recoverable. Anybody (who) suggests that this is recoverable in the current economic climate is just not a realist.”
In addition to the carbon tax, the company cited acquisition and restructuring costs as contributory factors to the overall loss after tax range of AUD $95 million to AUD $110 million. Such costs are associated with the transition to a new booking and ticketing system and the acquisition of Skywest and a majority stake in Tigerair Australia.
It was however, the announcement on the cost of the carbon tax, that set off a political storm that is sure to continue leading up the September 7th election date. Opposition leader Tony Abbott told reporters “If this election is about anything, it is about the carbon tax.” Current Prime Minister Kevin Rudd has pledged to alter the carbon tax to mitigate the cost to polluters.
Walter Wang is Managing Editor of CleanTechies. Follow Walter on Twitter: @energytaxprof