Virgin's profits take flight (Industry- Airlines)

Virgin Atlantic has bucked the trend within the beleaguered airline industry to announce a doubling of profits.  Sat Bal (29 May'09)

President Sir Richard Branson reported the airline's pre-tax profits doubled to £68.4million during the last financial year from £34.8million on the previous year. The buoyant results cover the period March 2008 to February 2009.

Interestingly the results reflect an increase in the number of premium travellers flying with the airline at a time when this high-yield sector is decidedly low volume in the aviation industry.

Virgin Atlantic attributes its success to prudent management decisions taken during the most volatile trading conditions in the airline’s 25-year history. Oil prices have been unpredictable peaking at $147 per barrel and dipping as low as $38 per barrel. However, Virgin Atlantic has avoided poor oil price hedging strategies that brought low rivals such as British Airways which reported a loss of £400m. 

Group sales, including leading tour operator Virgin Holidays, rose 8.4% from £2.380billion to £2.579billion and the total number of passengers carried during 2008 increased to 5.77 million. 

The airline's numbers are all the more remarkable given its claim that ticket prices are at their lowest for 25 years. The results are welcome news for staff who will enjoy the benefits of a  bonus payout scheme which shares 10% of the Group’s profits among employees.

“The last financial year has proven to be the most volatile yet in our 25-year history," said Sir Richard Branson. "To increase profits against a backdrop of such a severe recession is an excellent achievement by all of our staff at Virgin Atlantic.”

Steve Ridgway, CEO (pic left) added: “We are winning market share from our competitors during the toughest trading environment ever. With some of the lowest fares ever, consumers have never had it so good for so long. Our load factors remain resilient as travellers take advantage of these bargain fares, proving the value of vigorous competition.”

Virgin Atlantic has been in the headlines more recently with its continuing campaign against the proposed merger of British Airways and American Airlines. The airline has long argued that the proposals would mean less competition on key transatlantic routes into and out of Heathrow.

“BA/AA is the first big test for the new administration’s competition policy," said Sir Richard Branson. "I am sure that the Department of Transportation will put the interests of consumers first rather than bow to the influence of the big-spending airline, with strong political connections.”

Virgin Atlantic will celebrate its 25th birthday on 22 June amid continued expansion for
Virgin Holidays in the Middle East, Far East and Africa. New ventures include Virgin Holidays Cruises and new premium brand launched in conjunction with Hip Hotels.

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