Virgin Australia says it will cut its capacity, with a focus on regional route cuts, blaming election uncertainty, weak consumer sentiment and the slowing mining sector.
The airline announced the reduction of 5.1 per cent in capacity on Monday as it released a third quarter update showing a statutory loss after tax of $58.8 million in the three months to March 31.
Virgin's underlying loss for the period was of $18.6 million.
The airline has also forecast underlying profit before tax to be in the range of $30 million to $60 million.
This would represent an improvement of between $79 million to $109 million over the 2015 financial year.
The capacity reduction will happen in the fourth quarter of FY16 with regional routes the focus of domestic reductions.
Chief executive John Borghetti said weak consumer sentiment, worsened by the prospect of an early federal election was creating a challenging operating environment.
"This environment has been impacted by weak consumer demand and sentiment, uncertainty around the federal election and the resources sector downturn," Mr Borghetti said in a statement to the ASX.
"As a consequence, we will reduce group capacity by 5.1 per cent in the fourth quarter, with domestic reductions focused on regional routes."
He said the fleet restructure charges and other initiatives to come will provide Virgin with significant cost savings.
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