Virgin back in profit despite stiff headwinds
Thursday 11 August 2011
Virgin Atlantic returned to cruising speed yesterday as the airline's finances soared back into the black despite taking a £40m hit from the ash cloud and winter cold snap.
The carrier, which is still majority owned by Sir Richard Branson, reported pre-tax profits of £18.5m over the year to the end of March, with revenues up by 13 per cent to £2.7bn. The previous year, the group slumped £132m into the red as the credit crunch and the subsequent recession wreaked havoc in the aviation industry.
The upbeat figures came the day after Virgin Atlantic finally did a deal with its pilots to avert strike action threatened for months in a dispute over pay and conditions.
Virgin Atlantic chief executive Steve Ridgway was bullish yesterday. "We have demonstrated the resilience of our business by weathering the toughest economic period for aviation and have now returned the business to profit," he said.
The momentum is continuing, the airline added. In the most recent quarter – the three months to the end of May – Virgin Atlantic has introduced two new Airbus A330s and also launched a new route from Manchester to Las Vegas.
Revenues for the quarter rose by 7.6 per cent to £658m, the group said.
However, Mr Ridgway warned of tougher trading conditions ahead as the global economic outlook continued to darken. "A sharp recovery in the first half of the year has been tempered by more challenged trading in the latter period due to increased capacity in the market and high fuel prices," he said last night.
Virgin Atlantic is not the only carrier to be feeling the pinch. Air France and Lufthansa both recently published financial results hit by spiralling oil prices, while US carrier Delta admitted its fuel bill was outpacing its revenue growth.
That said, Virgin Atlantic is going ahead with plans to invest £100m in the business over the months ahead. The investment programme includes plans to buy new Airbus A330 aircraft, launch additional services to the Caribbean and Ghana, and create 1,000 jobs. The group is also doubling the size of its Virgin Holiday retail chain, creating another 200 jobs as the network of stores expands to 120 outlets.
"Whilst we have been very focused on trading the airline back to profitability, we have worked hard to introduce new aircraft, new routes and extrarotations to the existing network where there has been high demand," Mr Ridgway said.
Following this week's deal with the pilots' trade union, Virgin Atlantic will now undertake a major recruitment drive to up both cabin crews and pilot numbers. Some 63 per cent of Virgin Atlantic members of the British Airline Pilots Association this week voted in favour of a settlement of the dispute, in response to an improved offer from management including a profit-sharing scheme and a review of working conditions.
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