Virgin Blue in profit after only seven months

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Virgin blue, Sir Richard Branson's cut-price Australian airline, has moved into the black after just seven months despite becoming embroiled in a price war with the country's leading carriers Qantas Airlines and Ansett.

The airline, part of the transport and retail conglomerate Virgin Group, is this week expected to report that it made a trading profit of A$500,000 (£196,000) from its launch on 31 August to the end of March.

Sir Richard had not expected the airline to reach profitability for at least three years and the result came in spite of the intense competition, weakness of the Australian dollar and higher fuel costs.

Brett Godfrey, the chief executive of Virgin Blue, said the result "sends out a signal to our competitors ­ we're here and we've found our niche".

"We had our first profitable month in December," he said. "We had an even larger profit in January, and I think that's the month that most airlines lose money in."

Godfrey said the airline's performance would improve as market conditions become more favourable.

The heavy one-off costs of setting up Virgin Blue, however, have pushed the airline to a net loss of A$11m in its first seven months.