Virgin Australia flags higher fuel costs amid the Mideast conflict

(Corrects to remove dated reference ‌to Virgin adjusting ​airfare ​in paragraph 1. The company announced those measures on March 20.)

April 15 (Reuters) - Virgin Australia said on Wednesday it expects higher fuel costs and ‌has adjusted capacity for the second half, citing the recent price ⁠volatility stemming from the war in the Middle East.

The airline expects an increase in fuel costs, one ‌of its largest expenses, of ‌around A$30 million to A$40 million ($21.38 million to $28.51 million) for the second half of fiscal 2026.

The forecast change comes a day after the country's flag carrier ​Qantas Airways also sharply raised its fuel cost outlook, citing higher and volatile jet fuel prices.

Here are some details:

* The company flagged that the price ⁠of jet fuel has beenextremely volatile and has more than doubled since the end ofFebruary 2026, impacting fuel costs ​for the June 2026 quarter. * The airline expects its 2026 full-year financial outlookto remain unchanged, with underlying earnings before interestand taxes (EBIT) ​and underlying EBIT margin to be higher in ‌thesecond half compared to the prior year. * Revenue per available seat kilometre (RASK), a key measureof pricing power, is expected to grow ⁠by 5% in the second half,compared to its previous forecast of 3%-4%. The RASK growth forthe fourth quarter is estimated to be 6%. * Total domestic capacity is now expected to increase ⁠by 1%in the second half and reduce by 1% in the fourth quarter. * Virgin Australia expects ​minimal impact from thecancellation of its services to Doha until mid-June due to thewet lease arrangement it has with its operational partner QatarAirways. * For the remainder of the second half of ‌fiscal 2026,Virgin Australia has hedged 92% for Brent crude oil and 71% forrefining margins. * For the full year, only the unhedged ‌portion of Brentcrude oil and refining margins will be exposed to the volatilityfrom the ⁠Iran conflict. * The group has also ‌hedged 93% for Brent crude ​oil and 15%for refining margins for the first half of fiscal 2027.

($1 = 1.4031 Australian dollars)

(Reporting by Sherin Sunny in Bengaluru; Editing by ‌Vijay Kishore)

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