Virgin Australia's wings clipped as slow trade bites Wary investors have punished Virgin Australia sending shares plummeting. VIRGIN Australia shares have nosedived in their biggest single-day drop for three years after the airline warned profit levels were falling. While analysts said the profit warning was unsurprising given difficult conditions in the domestic market, wary investors punished the airline. Virgin's shares plummeted 17.4 per cent. It was the steepest one-day drop since May 2010 - the month chief executive John Borghetti stepped into the job. Shares in the airline closed yesterday at 38c, which is their lowest price since last July. They have fallen almost 10 per cent this year, while shares in rival Qantas have rallied. In an update released after the market closed on Wednesday, Virgin warned underlying pre-tax profit would be lower this financial year than last. In the year to last June, the group chalked up $82.5 million in underlying profit - an earnings measurement that strips out "one-offs." The airline did not say how much lower the result would be this year, but analysts now forecast a tally of $55 million to $60 million. Virgin said was not possible to provide a forecast "given the slower trading conditions and competitive and weakening economic environment" The airline had expected that costs involved in setting up its new Sabre reservation system in the third quarter would be recovered this quarter. But yesterday, the airline said trading so far this quarter was weaker than expected so it would fail to recover the costs. It echoes commentary made last month by Qantas chief Alan Joyce, who warned the flag carrier faced a tough second half due to strong competition in the domestic market and costs involved in building its alliance with Emirates. The warning prompted analysts to lower their forecasts for Qantas. Virgin chalked up a $22.8 million net profit last year after a loss the previous year of $228 million.