Virgin Atlantic's founder and now part-owner Richard Branson says dropping some routes may be on the agenda even though the airline is recovering nicely as passenger demand rebounds.
This follows the airline's recent release of its 2021 numbers headlined by a US$776 million loss for the year before tax and exceptional items. It also comes as fast-rising aviation fuel prices put the financial pinch on Virgin Atlantic and other airlines around the world.
Business is good, says Richard Branson
Mr Branson is out and about discussing the need for countries like the UK to reduce their consumption of fuels from Russia, thereby reducing payments to Russia - all with the broader aim of assisting Ukraine. But in the round of interviews conducted over the last day, Richard Branson has also talked ventured into aviation news and how things are going at Virgin Atlantic.
"We were in a deep hole over COVID, but the last two or three months have been exceptionally good for the airline industry," he told Bloomberg TV on Wednesday. "Fuel prices have obviously gone through the roof, but every single seat on Virgin Atlantic is pretty much full up. So we're able to pay our bills again, we're able to start paying off debt that we accumulated over COVID, and that's great news."
This broadly aligns with what Oli Byers, the airline's Chief Financial Officer, said when handing down the 2021 results earlier this month.
“2022 will be a year of transition as we move from survival into recovery and capitalize on the return of customer demand. We have cause for optimism balanced with macroeconomic and political uncertainty, alongside the residual risks of the pandemic. We anticipate a return to profitability in 2023, driven by a recovery in air travel demand and more than £300m annual cost savings, already delivered."
Is Virgin Atlantic eyeing axing a couple of routes?
Flicking the switch to CNBC on Wednesday, Virgin Atlantic's founder also bobbed up there, again talking about the need to reduce fuel consumption. He began by listing several fuel-saving tips everyday households could undertake. Usually, tips on frugal living from plutocrats doesn't go down particularly well among the hoi polloi. But Branson broadened his discussion to include big business and dropped this comment.
“If you’re an airline, maybe cutting a couple of routes that are not making a lot of money."
Simple Flying readers could take that as a heads-up Virgin Atlantic is eyeing chopping a couple of its least successful routes - all under the guise of consuming less fuel, of course. Virgin Atlantic flies to 25 destinations from London Heathrow, including multiple destinations across North America and the Caribbean. Speculating which two routes are the least successful would make an interesting parlor game. After all, if Richard Branson is imploring everyone else to reduce their fuel consumption, he might have to lead by example.
Meanwhile, it recently emerged that Virgin Atlantic's cargo business hit record levels last year, more than doubling its pre-pandemic cargo revenues. Benefiting from high rates as a result of capacity shortages, Virgin Atlantic trousered almost US$585 million from its cargo business in 2021, up 40% on 2020's cargo revenues and up over 200% on its pre-pandemic annual cargo revenues.