Virgin thanks Terminal 5 chaos for jump in business class traffic

Virgin Atlantic – already trading warm words over British Airways' proposed alliance with American Airlines – added fuel to the fire yesterday by ascribing its booming business class sales to the chaotic opening of BA's new Heathrow terminal.

Virgin Atlantic's annual financial results for the year to February show pre-tax profits up from £6m to £34.8m, and group sales up by 9.1 per cent to £2.34bn.

Overall passenger numbers were up 7.6 per cent to 5.7 million, but the stellar performer was business class, up by a massive 22 per cent.

Part of the rise is due to additional international routes. But a key factor is the defection of passengers from British Airways because of the baggage handling problems and severe delays when Terminal 5 opened in March, says Virgin.

BA was quick to deny the accusation. "We do not recognise Virgin's claims to be taking business from us on the grounds that passengers do not like Terminal 5," a spokesman for the airline said. "Up to 65,000 passengers a day are now using Terminal 5, a number that has risen steadily from 40,000 a day in April. Passengers are extremely happy with Terminal 5, which is working well and provides an experience vastly superior to the rest of Heathrow. It is not surprising if other airlines are envious."

The two companies are already at loggerheads over BA's proposal for commercial co-operation with American Airlines and Iberia on transatlantic routes, which was announced this month. Sir Richard Branson, chief executive of the Virgin Group, which includes Virgin Atlantic, reiterated his concerns yesterday. "It's ironic that just as regulators are breaking up one monopoly – BAA – British Airways and American Airlines are trying to create another," he said. "Our results prove that consumers want choice on transatlantic routes. Unless the regulators block the proposed BA/AA monopoly, consumers will lose out – and they'll pay higher ticket prices for the privilege."

Virgin Atlantic's results for the first quarter of 2008 show pre-tax profits of £23.5m, compared with a £1.8m loss last year. Sales were up by 16 per cent to £645m.