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Fri, Apr 04, 2008

Qantas To Take Big Hit With New Competition For US Business

V Australia To Begin Sydney-LAX Flights Later This Year

Analysts expect Qantas will take a $200 million earnings hit when Virgin Blue's new international carrier, V Australia, becomes fully operational.

V Australia will launch flights between Australia and the US later this year, serving one of the most lucrative markets in all of aviation.

The Sydney Daily Telegraph reports the trans-Pacific route has been a cash cow for Qantas for years, with competition so far only from United Airlines.

Now V Australia looks set to grab a slice of the action, a move that analysts believe could add at least $100 million to Virgin Blue's annual earnings.

V Australia will fly its new Boeing 777-300ER between Australia and west-coast-US cities. Initial pricing will be $1899 US, undercutting Qantas by 16 percent.

Merrill Lynch transport analyst Kevin O'Connor estimates Virgin will also have a significant impact on Air New Zealand. He also expects Qantas to retaliate with price cuts.

FMI: www.qantas.com, www.vaustralia.com

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