RBS analysts Mark Williams and Michael Newbold posted to have tabled with Senior Virgin Blue Management yesterday were highly disappointed to learn about the short-term challenges facing the business.

The meeting with RBS ended with a conclusion that investors should hope to witness near-term trading scenario for the airline to continue to be “very challenging”.

“We see the rationale in this strategy, given Virgin Blue can’t win a battle of the lowest cost base. However, it is likely to add additional cost pressures in the short term as the change in the strategy is pursued”, posted Williams.

Virgin, last Friday landed the market in a frenzy following a squeeze 75 per in its annual earnings guidance - its second in a month - posing a sharp slip in leisure travel as well as a sudden decline in consumer confidence as the culprits.

Merrill Lynch Analyst, Kevin O'Connor posted that Qantas was also suffering, however, had a significantly less exposure compared to JetStar, which is leisure-market oriented and attributed to just 9% of the group’s passenger-kilometers, while Qantas had 90% of the corporate market.

RBS possess Virgin Blue as a “hold” with a target of 37 cents, 9c higher than yesterday’s closing price of 28c.