Virgin Atlantic reports 'strong progress' on return to profitability
Virgin Atlantic halved losses last year to £51 million and claims to be on course for a return to the black by the end of 2014.
The group’s pre-tax loss for the year to December 31 of £51 million compares to a loss of £102 million in 2012.
The airline said the result demonstrates “strong progress” towards a target to return to profitability by the end of this year following a two-year recovery plan. It came as Virgin forged a transatlantic alliance with Delta Airlines and the start of Virgin's Little Red domestic services.
The improved financial performance in the first year was largely driven by an increased revenue performance and greater operational efficiencies, Virgin Atlantic said. The airline carried almost 6.2 million passengers in the period.
The results are based on a new financial reporting period which now aligns with the calendar year.
As a result of the change in financial year, the group is also disclosing statements to cover a 10-month period for March to December 2013, which show a pre-tax profit of £7 million.
The airline reported turnover improving by 4.9% in the calendar year, increased passenger revenue of £153 million and a better load factor of 81.6%. Premium Economy travel was up by 7.5% and Upper Class by 1.8%.
The group ended the year with a balance of £320 million.
Virgin Holidays continued to perform well with an 8.1% increase in revenue in a profitable year despite exceptional restructuring costs.
The holiday arm continues to grow market share in its key destinations and is showing growth in forward sales for 2014/15, the company said.
Virgin Atlantic chief executive Craig Kreeger said: “The group has made good progress in 2013 towards our target of a return to profitability by the end of this year.
“We have implemented a programme of measures which put in place firm foundations for future success and our results to this point show that we are delivering against our plan.
“Our strategy has been to focus on network, alliances and managing our cost base in a way which has not impacted on the customer. For example, use of a new fuel management system delivered savings of £8 million in a single year.
“We have also increased our revenues and passenger numbers, which is the result of both a committed workforce providing exceptional customer service and a loyal customer base with high advocacy. We’re thrilled with the response we’re seeing from our customers.”
He added: “Going forward, the impact from our Delta relationship which greatly enhances our revenue opportunities in the US, improving result from Little Red services and improvements in selling activity, supported by a strong focus on managing the cost base and on fuel efficiency gains, mean we are confident that we will deliver on our target and return to profitability.
“We are building a sustainable and profitable airline for the future and it is an exciting time for our company.”
The first in a fleet of 16 Boeing 787-9 Dreamliners will be delivered from the autumn, an aircraft which is expected to deliver a “step-change” for the business and allow the retirement of older four-engine Airbus A340s.
Virgin is promising “noticeable improvements” for passengers, with a new staff service training programme and technological improvements such as a wi-fi roll-out and expanded use of personal electronic devices throughou