Virgin Atlantic profitability target pushed back to 2024

Virgin Atlantic predicts it will return to profitability in 2024 – despite last year’s forecast that it would be back in the black by 2023.

Last April, chief executive Shai Weiss described 2022 as a year of transition after the pandemic, “from survival to recovery and on to profitability by 2023”.

Now the airline says 2023 is a “year of delivery” as the combined effects of a weak pound, persistent high inflation, fuel prices and rising interest rates mean a return to profitability is now expected in 2024.

The prediction came as the carrier reported its 2022 financial results, which showed revenues reached £2.9 billion, recovering to 98% of 2019’s level.

It said: “The results reflect 2022 being a year of recovery and ramp-up for Virgin Atlantic as the Covid-19 related challenges were overtaken by a surge in customer demand for travel.”

The airline made a statutory loss of £342 million, £144 million better than in 2021.

Oli Byers, Virgin Atlantic chief financial officer, said: “Our 2022 financial results reflect the first year of recovery following the immense challenges faced by our industry due to the Covid-19 pandemic. Our financial and operational performance demonstrates that our plan is working.

“To deliver sustainable profitability requires a continuous focus on capacity and cost discipline.

“In 2022 we maintained this focus, realising the benefit from £300 million in annual cost savings alongside improving our fleet utilisation. 2023 is set to deliver more flown sectors vs 2019 with four fewer aircraft.

“2023 will be a year of delivery as we build on the successful recovery achieved in 2022.

“We have cause for optimism as demand for travel has remained strong through the first quarter of 2023 balanced with continued macro-economic uncertainty.

“We anticipate growing underlying Ebitda [earnings before interest and taxes] in 2023 and are on track to return to profitability in 2024.”

Commenting on 2022’s results, Weiss added: “The devastating war in Ukraine dramatically affected fuel and energy prices and global supply chains. In parallel, inflation stoked a cost-of-living crisis, particularly felt by UK consumers as energy prices rocketed.

“These factors contributed towards losses, albeit significantly improved on 2021.”

He paid tribute to the airline’s staff, commenting: “Belief, determination, and conviction ensured our survival. In 2022, it allowed us to move into recovery by proving that our plan is working.

“In 2023, it is propelling us into our year of delivery, when we deliver for our people and our customers, ensuring everyone can take on the world, driven by the vision of becoming the most loved travel company and sustainably profitable.”

The results statement said Virgin Atlantic Holidays also benefitted from the resurgence in travel demand, with 250,000 customers generating revenues of £487 million, 78% of 2019 levels.

The Virgin Group owns 51% of the airline, while the remaining 49% is held by US carrier Delta Air Lines.

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