Branson gets the blues in Oz

SIR Richard Branson's discount Aussie carrier Virgin Blue has seen its defences in the battle against takeover by Patrick Corp eroded, with the share price falling 0.5% today to A$1.93, ever closer to the hostile bid price of A$1.90.

Local transport group Patrick has pounced as Virgin Blue struggles with greater competition, soaring fuel bills and falling passenger numbers.

Fears of another profit downgrade were heightened yesterday when the company said it could not 'quantify reliably' its profit outlook beyond March 31. Virgin Blue warned in January that full-year profit would drop by up to 15% on the previous year's A$150m (£58.3m).

Interim chairman, David Ryan, warned in a statement that 'difficult market conditions, including high fuel prices and excess capacity may persist'.

Virgin Group has increased its stake in the budget flyer, buying 5m shares at A$1.95. But analysts believe the share price is approaching the point at which many minority shareholders may take the Patrick offer.

Patrick's offer for the 45.4% of Virgin Blue it does not already own closes next Tuesday, but the company is expected to extend it.

Virgin Blue also said its deputy chief executive and chief operating officer Rob Sherrard, is leaving the company.

Sherrard was a co-founder of Virgin Blue and oversaw the low cost airline's operations from its inaugural flight on August 31, 2000 to present day.

In recent months Sherrard has managed the transition of Virgin Blue's operations to Andrew David, who has been appointed chief operating officer. Sherrard described his decision to retire from Virgin Blue as long considered and purely personal.