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Last Updated: Monday, 17 May, 2004, 06:53 GMT 07:53 UK
Virgin Blue sees profits take off
Virgin Blue worker and plane on runway
A fare surcharge is being introduced to cover oil price rises
Virgin Blue, the no-frills budget airline introduced to Australia in 2000 by Richard Branson, has posted a large jump in annual pre-tax profit.

Profits rose to 45m Australian dollars ($31.2m; 17.7m) in the year ending 31 March, up 45% on the previous year.

But shares fell on concerns about rising fuel prices and new competition.

The figures come hard on the heels of the firm's decision to add a A$6 surcharge to the price of each ticket to cover the surging cost of jet fuel.

Budget rival

Fuel prices at Virgin Blue increased by more than 28% during the year, although the firm said it "was substantially hedged" for the current financial year at below $30 per barrel.

The ticket surcharge will come into effect at midnight on Tuesday.

"We will continue to grow our business aggressively, however, we will focus on profitable growth, not simply greater domestic market share," said chief executive Brett Godfrey.

He said Australia's domestic airline industry had become increasingly competitive, with national carrier Qantas launching its own budget airline, Jetstar, later this month to directly challenge Virgin Blue.

Virgin Blue said it will add a further five aircraft to the fleet during the year.

However, the company's stock fell 2.8% to A$2.06, well below its A$2.25 issue price, on continued fears over the impact of higher fuel prices.

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