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Last Updated: Wednesday, 16 November 2005, 07:31 GMT
Virgin Blue profits drop on fuel
Virgin Blue planes
Virgin Blue has had a tough year
Australian budget airline Virgin Blue, quarter-owned by Sir Richard Branson's Virgin Group, has seen annual profits drop amid high fuel costs.

Net profit for the year to 30 September was 105m Australian dollars ($77m; 44m) compared with A$157m a year ago.

But Virgin Blue shares jumped 9% after it announced its first ever dividend, saying it would return A$262m in cash to shareholders.

The move comes as its main shareholder is the subject of a takeover bid.

Difference of opinion

Virgin Blue is majority-owned by port company Patrick Corp.

Toll Holdings, Australia's biggest land transport firm, has launched a hostile bid for Patrick and accused the company of using the dividend payment to improve its balance sheet.

Sir Richard Branson, a key supporter of Toll's bid, also criticised the payment.

Patrick denied their accusations.

Virgin Blue was launched five years ago and now has roughly one third of Australia's domestic airline market.

However, it is facing stiff competition from national carrier, Qantas, which also launched its own budget airline, Jetstar.

Virgin Blue said that it will look to boost business flyers in an effort to increase profits.

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