Virgin Atlantic shrugs off recession and high fuel prices as profits soar

Published on Tuesday 26 May 2009 21:06

SIR Richard Branson's Virgin Atlantic nearly doubled profits in its latest trading year, the airline disclosed yesterday.

The increased profit at Virgin was in stark contrast to the 400 million loss posted by British Airways last week.

Shrugging off high fuel prices and a recession that has battered the airline industry, Virgin Atlantic's profits surged to 68.4m in the year to end-February. That compared with a 34.8m profit in the previous 12 months. Group sales, including tour operator Virgin Holidays, climbed 8.4 per cent to 2.58 billion from 2.38bn, while the total number of passengers carried rose about 70,000 to 5.77 million.

Virgin said its higher-margin first and business class traffic rose 1 per cent in the year, compared with a 13 per cent fall at BA in this category. Load factors – the proportion of seats sold on planes – lifted about 2 per cent to 78 per cent, a spokesman said.

The company claimed that the result had been achieved despite "the most volatile conditions in the airline's 25-year history". During the year oil prices peaked at $147 a barrel and subsequently dipped as low as $38 a barrel.

"To increase profits against a backdrop of such a severe recession is an excellent achievement by all of our staff at Virgin Atlantic," Branson maintained.

Steve Ridgway, Virgin Atlantic's chief executive, said it was the "toughest trading environment ever", but that the group was winning market share from competitors "with some of the lowest fares ever". An economy class to New York from London is currently just 300.

Ridgway commented: "Our load factors remain resilient as travellers take advantage of bargain fares, proving the value of vigorous competition."

Yesterday's strong numbers from the group came as Virgin continues its campaign against BA's attempt to get regulatory approval for a transatlantic profit-sharing tie-up with American Airlines (AA).

Virgin said in its statement that the plans for BA and AA to effectively merge were not in the interests of consumers.

The company said both airlines overlap on some of the most popular airline routes in the world and it would mean less competition on routes such as Heathrow-New York JFK, Heathrow-Boston, Heathrow-Miami and Heathrow-Los Angeles.

Branson said: "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."

The Department of Transportation is due to rule on the BA/AA application by the end of October.

&#149 Most of Virgin's 8,500 staff, from pilots to admin, will share roughly 6.5m as a bonus payout, equating to roughly one-and-a-half weeks' wages.