Last week, British airline Virgin Atlantic reported a loss of £26m ($34m) for 2018. While still not ideal for the carrier, it represents a notable improvement on it’s 2017 loss of £49m ($65m). Company CEO Shai Weiss said that a weak pound sterling, Brexit uncertainty, and a prolonged shortage of Rolls Royce Trent 1000 engines (used on their 787 aircraft) were factors contributing to the loss.
Positive growth figures
Weiss highlighted several statistics to indicate the positive direction the airline was moving in:
- 5.8% rise in revenue from the previous year, to £2.8b ($3.7b)
- 4.8% increase in passenger numbers from the previous year, to 5.4 million
- 3.5% capacity increase
- 10.2% rise in Upper Class passenger unit revenue
- 2.1% increase in premium cabin sales
Additionally, joint-venture partner Delta Air Lines – owner of a 49% stake in Virgin Atlantic – also reported a 13.5% increase in US point-of-sale bookings.
However, tour operator Virgin Holidays reported a pre-tax profit of just £6 million. This is a fall from £15.5m in 2017 “due to softer consumer demand”, and indicates a particularly concerning trend as 2016 saw a profit of £19.1m. However, Weiss noted that Virgin Holidays opened 22 new retail stores in 2018. This expansion was in partnership with British retail chain Next.
CEO Remains Optimistic
Weiss is optimistic about this report, calling it “the first year of positive growth since 2014” despite the economic headwinds faced by many UK-based businesses. He believes Virgin Atlantic is headed in the right direction and praised his team’s level of customer satisfaction:
“We continued to invest in a host of new initiatives to delight our customers. Now it’s time to build on these foundations and our vision to be the most-loved travel company.”
“2018 saw us delivering industry leading service and unrivalled customer experience. We remained number one for customer satisfaction across the Atlantic.”
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“While a loss is disappointing, our performance improved in 2018 despite challenging economic conditions and put us on a trajectory for growth and return to profitability.”
2019 will see more growth and change for the airline. In addition to new routes recently announced, the airline’s joint-venture with Delta will also include codeshares with Air France-KLM. The fleet will have its first Airbus A350 join this summer, featuring new Upper Class, premium and economy cabins.
Tom Mackay, Virgin Atlantic’s CFO said “We remain in a confident and resilient position. Economic factors will continue to challenge us in the year ahead, [but] we’re in a strong cash position.”
Only time will tell if this rosy outlook proves to be correct.