Australia's Virgin Blue year profit falls 55 pct

SYDNEY, Aug 19 (Reuters) - Virgin Blue Holdings Ltd (VBA.AX), Australia's second-biggest airline, reported a 55 percent fall in annual profit on Tuesday, hurt by surging oil prices, and cut its dividend.

Net profit totalled A$97.7 million ($85 million) for the year ended June 30 and Virgin Blue skipped its final dividend. The shares dived 13 percent after the news.

Virgin, a quarter owned by British entrepreneur Richard Branson, said business conditions in the current year will be the most challenging, and while it expects a positive result, this will be a challenge.

In April, Virgin forecast net profit would more than halve to around A$100 million. It has cut capacity to battle high oil prices. ($1=A$1.15) (Reporting by Denny Thomas, Editing by Jonathan Standing and Mark Bendeich) ((denny.thomas@reuters.com; +61 2 9373 1812; Reuters Messaging: denny.thomas.reuters.com@reuters.net))