Profit halves at Virgin Atlantic but Branson still plans growth

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The Independent Online

Sir Richard Branson's Virgin Atlantic yesterday reported a halving in underlying profits last year but said it planned to press ahead with a 10 per cent expansion of the airline.

Sir Richard Branson's Virgin Atlantic yesterday reported a halving in underlying profits last year but said it planned to press ahead with a 10 per cent expansion of the airline.

Profits before tax and exceptional items fell from £48.7m in the year ending April 2003 to £20.9m for the 10-month period to the end of February this year. Turnover during the 10-month period was £1.27bn compared with £1.4bn in the previous 12 months.

In 2002-03 Virgin took a £33m impairment charge which reduced its bottom-line pre-tax profit to £15.7m but in the latest period it had no such one-off items.

The fall in profits came in a period when the world airline industry was ravaged by the war in Iraq, the Sars outbreak in the Far East and rising fuel prices. Sir Richard said: "To record any sort of profit in the trading period is impressive."

He added that Virgin was beginning to see positive signs on revenues, with passenger numbers well up this year, aircraft flying 90 per cent full and yields recovering in the business-class sector of the market.

On the strength of this, Sir Richard predicted another "solid" performance for 2004-05. In March, Virgin announced plans to take on 1,400 extra staff, add three new Airbus A340-600 long-haul aircraft to its fleet, and launch new routes to Australia, the Bahamas and Cuba.

The airports operator BAA meanwhile reported that passenger numbers at its seven UK airports rose last month by 15 per cent to 11.4 million. The year-on-year increase was distorted by the effect on long-haul markets of Sars and the Iraq war in April last year, and on the low-cost market by the temporary suspension of Buzz flights following its takeover by Ryanair.

The biggest growth last month was in the long-haul market, with North Atlantic traffic levels up by 19 per cent and passenger numbers on other intercontinental routes up by 27.5 per cent.

Heathrow recorded a 15 per cent increase in traffic, taking passenger numbers on a rolling 12-month basis close to 65 million. Stansted saw traffic levels grow by 34 per cent while Gatwick was up 8 per cent.

The continued growth of the low-cost carriers helped increase European scheduled traffic by 19 per cent compared with April last year. Traffic levels were up 36 per cent at Southampton and 8 per cent at BAA's Scottish airports, Glasgow, Edinburgh and Aberdeen.

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