Virgin Atlantic reports sharp rise in profits

Published on Tuesday 26 May 2009 10:37

VIRGIN Atlantic piled on the misery for struggling rival British Airways today after saying it had virtually doubled annual profits.

The airline said pre-tax profits soared from 34.8 million to 68.4 million in the year to February, despite a backdrop of volatile oil prices and a deep recession.

The results contrast with BA's record annual operating loss of 401 million, reported last Friday, after its fuel bill reached almost 3 billion.

The carrier, which is majority owned by Sir Richard Branson's Virgin Group, flew 5.8 million passengers over the period, helped by higher numbers of premium travellers.

BA reported a 13% fall in premium travellers for the second half of its financial year on Friday.

Virgin spent almost 1 billion on fuel last year, but profits were aided by its hedging of oil prices – which hit 147 dollars a barrel last July – and currency benefits.

Virgin Atlantic, which celebrates its 25th birthday in June, has a fleet of 38 aircraft and 8,500 staff. They will receive 10% of the airline's profit haul in bonus payouts.

Sir Richard said: "To increase profits against a backdrop of such a severe recession is an excellent achievement by all of our staff."

Chief executive Steve Ridgway added that Virgin had increased its market share, but expected the current trading year to be much tougher.

"We are just managing the business to make sure we remain strong and hang on to our cash," he said.

But Virgin also hit out at rival BA's plans for a transatlantic joint business with American Airlines and Iberia, which it said would hit competition on key routes to the US.

BA has said it is confident of gaining approval from US authorities in the next six months but Sir Richard said the decision was "the first big test" for President Obama's competition policy.

"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," he said.

Virgin Atlantic's other major shareholder is Singapore Airlines. Sir Richard sold a 49% stake in the business to the airline in 1999.