Virgin Atlantic defies aviation slump as profit soars to £68m

Rising sales of first- and business-class seats buck trend across the industry

Sir Richard Branson's airline Virgin Atlantic almost doubled its profits last year despite the carnage in so much of the global aviation industry.

The company yesterday reported pre-tax profits of £68.4m for the year to February, compared with £34.8m in the previous 12 months. Revenues, including Virgin Holidays, grew by 8.4 per cent to £2.5bn. Some 10 per cent of the profits will be shared out among the company's 8,500 staff.

The strong performance was helped by rising sales of first and business-class seats. Load factors – a favourite industry index calculated as a ratio between passenger miles flown and seat miles available – also remained strong thanks to rigorous price-cutting. Overall, a total of 5.77 million people flew with Virgin Atlantic last year.

Steve Ridgway, the chief executive, said yesterday: "We are winning market share from our competitors during the toughest trading environment ever. Our load factors remain resilient as travellers take advantage of these bargain fares, proving the value of vigorous competition." Few airlines can boast of rising profits as recession hits both business and consumer spending and rocketing oil prices sent aviation fuel bills to unprecedented highs. More than 30 carriers have gone bankrupt since the oil price started to take off at the start of 2008.

Even the big players are struggling. Virgin Atlantic's arch-rival, British Airways (BA), is having a torrid time. Last week, the flag carrier reported its worst losses since privatisation in 1987, with a £401m pre-tax loss for the year to March. The company's fuel bill went up by £1bn to £3bn and the fall of sterling against the dollar took another £180m off its bottom line. But the biggest problem was the slump in business and first-class travel: sales of BA's premium seats fell by 15 per cent in first eight weeks of the new financial year.

BA is by no means unique in its difficulties. This month has also seen Air France-KLM announce plans to cut 3,000 jobs, on top of the 2,700 slashed last year. The Spanish flag carrier, Iberia, also unveiled a €147m (£129m) loss and scrapped its dividend.

Not only is Virgin reporting strong sales of premium seats but it has also claimed a victory from its hedging strategy. Buying fuel two years in advance insulated the company from the worst excesses of oil price rises, adding a relatively modest £300m to take last year's total fuel bill to £1bn. By selling off much of the hedge book since then, the group also hopes to avoid being hit by the subsequent falls. Sir Richard, the president of the company, said: "The last financial year has proven to be the most volatile yet in our 25-year history. To increase profits against a backdrop of such a severe recession is an excellent achievement."

Virgin's numbers were applauded by industry experts. But unlike many of its competitors, Virgin Atlantic is not listed, and is therefore neither subject to the same level of scrutiny nor required to publish detailed financial information.

Howard Wheeldon, a senior strategist at BGC Partners, said: "Having doubled profits in the short space of a year, and in what was perhaps the most difficult year for all airlines since 2001-2, deserves significant praise. Sadly, this being a private as opposed to a public company, no further details have been made available and we are left to scratch our heads wondering about the state of Virgin Atlantic balance sheet and borrowings."

Sir Richard owns 51 per cent of Virgin Atlantic and the other 49 per cent is held by Singapore Airlines.

Arts and Entertainment
TVShow's twee, safe facade smashed by ice cream melting scandal
News
Brad Pitt and Angelina Jolie reportedly married in secret on Saturday
peopleSpokesperson for couple confirms they tied the knot on Saturday after almost a decade together
Arts and Entertainment
tv
Arts and Entertainment
Lisa Kudrow, Courtney Cox and Jennifer Anniston reunite for a mini Friends sketch on Jimmy Kimmel Live
tv
PROMOTED VIDEO
News
ebooksAn evocation of the conflict through the eyes of those who lived through it
News
Actor, model and now record breaker: Jiff the Pomeranian
Video
News
REX/Eye Candy
science
Sport
Alexis Sanchez celebrates after scoring his first goal for Arsenal in the Champions League qualifier against Besiktas
sportChilean's first goal for the club secures place in draw for Champions League group stages
News
i100
News
Down time: an employee of Google uses the slide to get to the canteen
scienceBosses are inventing surprising ways of making us work harder
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

PMO Analyst - Risk - Banking - London - £350-£400

£350 - £400 per day: Orgtel: PMO Analyst - Risk - Banking - London - £350 - £4...

C# Developer (C#, ASP.NET Developer, SQL, MVC, WPF, Real-Time F

£40000 - £48000 per annum + benefits+bonus+package: Harrington Starr: C# Devel...

C# Swift Payment Developer (C#, ASP.NET, .NET, MVC, Authorize.N

£45000 - £60000 per annum + benefits+bonus+package: Harrington Starr: C# Swift...

DevOps Engineer - Linux, Shell, Bash, Solaris, UNIX, Salt-Stack

Negotiable: Harrington Starr: A fast growing Financial Services organisation b...

Day In a Page

Israel-Gaza conflict: No victory for Israel despite weeks of death and devastation

Robert Fisk: No victory for Israel despite weeks of devastation

Palestinians have won: they are still in Gaza, and Hamas is still there
Mary Beard writes character reference for Twitter troll who called her a 'slut'

Unlikely friends: Mary Beard and the troll who called her a ‘filthy old slut’

The Cambridge University classicist even wrote the student a character reference
America’s new apartheid: Prosperous white districts are choosing to break away from black cities and go it alone

America’s new apartheid

Prosperous white districts are choosing to break away from black cities and go it alone
Amazon is buying Twitch for £600m - but why do people want to watch others playing Xbox?

What is the appeal of Twitch?

Amazon is buying the video-game-themed online streaming site for £600m - but why do people want to watch others playing Xbox?
Tip-tapping typewriters, ripe pongs and slides in the office: Bosses are inventing surprising ways of making us work harder

How bosses are making us work harder

As it is revealed that one newspaper office pumps out the sound of typewriters to increase productivity, Gillian Orr explores the other devices designed to motivate staff
Manufacturers are struggling to keep up with the resurgence in vinyl records

Hard pressed: Resurgence in vinyl records

As the resurgence in vinyl records continues, manufacturers and their outdated machinery are struggling to keep up with the demand
Tony Jordan: 'I turned down the chance to research Charles Dickens for a TV series nine times ... then I found a kindred spirit'

A tale of two writers

Offered the chance to research Charles Dickens for a TV series, Tony Jordan turned it down. Nine times. The man behind EastEnders and Life on Mars didn’t feel right for the job. Finally, he gave in - and found an unexpected kindred spirit
Could a later start to the school day be the most useful educational reform of all?

Should pupils get a lie in?

Doctors want a later start to the school day so that pupils can sleep later. Not because teenagers are lazy, explains Simon Usborne - it's all down to their circadian rhythms
Prepare for Jewish jokes – as Jewish comedians get their own festival

Prepare for Jewish jokes...

... as Jewish comedians get their own festival
SJ Watson: 'I still can't quite believe that Before I Go to Sleep started in my head'

A dream come true for SJ Watson

Watson was working part time in the NHS when his debut novel, Before I Go to Sleep, became a bestseller. Now it's a Hollywood movie, too. Here he recalls the whirlwind journey from children’s ward to A-list film set
10 best cycling bags for commuters

10 best cycling bags for commuters

Gear up for next week’s National Cycle to Work day with one of these practical backpacks and messenger bags
Paul Scholes: Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United

Paul Scholes column

Three at the back isn’t working yet but given time I’m hopeful Louis van Gaal can rebuild Manchester United
Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?