Virgin Australia Reduces Domestic Capacity Amid Rising Fuel Costs
Virgin Australia has announced a reduction in its domestic flight capacity as a response to rising fuel costs, which have been exacerbated by the ongoing crisis in the Middle East. The airline has managed to mitigate some of the financial impact through strategic hedging, with 92% of its Brent crude oil and 71% of its refining margins hedged for the remainder of the fiscal year. Despite these measures, Virgin Australia anticipates its fuel expenses for the second half of the year to be A$30-40 million higher than initially forecasted. To counterbalance these costs, the airline has increased airfares and adjusted its capacity growth projections. The company now expects a 5% increase in second-half yields, driven by a 6% growth in revenue per available seat kilometer (RASK) for the April-June quarter. Additionally, Virgin Australia has reduced its domestic capacity growth forecast from 2-3% to 1% for the second half of the fiscal year, with a 1% year-on-year decrease in the fourth quarter. 
