Share

Virgin Atlantic plots return to profit

London - British airline Virgin Atlantic expects the benefits of its cost-cutting plan and a tie-up with US carrier Delta Air Lines to help it back to profit by the end of this year.

Virgin, which last posted a profit in 2011 and is in the middle of a two-year turnaround plan under new CEO Craig Kreeger, halved its group pretax loss last year.

"These results, and what we've actually seen since the end of 2013, have us more than very confident that we will achieve this outcome," he said in a telephone interview on Thursday.

The airline, 51% owned by its British billionaire founder Richard Branson, reported a £51m group pretax loss for the year to December 31.

Virgin changed its financial reporting period last year but calculates the comparable 2012 loss would have been £102m.

Delta bought a 49% stake in Virgin last year and started operating a new joint venture with the British airline on January 1, which Kreeger said would help to push Virgin's bottom line into the black by attracting more US customers.

Cost savings

Also playing roles in the pick-up this year will be Virgin Atlantic Little Red, the company's short-haul operation between London Heathrow and three other British airports, and new aircraft with increased fuel efficiency.

The company is due to receive its first Boeing 787-9 Dreamliner this year and has 16 on order.

The improvement in Virgin Atlantic's losses last year was driven by more than £40m of cost savings, Kreeger said, citing significant improvements in fuel management.

Kreeger dismissed concerns about a European Commission examination of foreign holdings in European airlines, saying that the Delta deal had already undergone regulatory scrutiny.

Virgin, which like other established carriers has suffered in recent years from soaring fuel costs, increased competition and the global economic downturn, is playing catch-up with several other European long-haul carriers.

Transatlantic rival British Airways, part of IAG, and Air France-KLM both returned to profitability in 2013.

"One of the reasons the company has been a little slower to rebound was the delays we saw in the delivery of 787s," Kreeger said, referring to an aircraft order made in 2007.

We live in a world where facts and fiction get blurred
Who we choose to trust can have a profound impact on our lives. Join thousands of devoted South Africans who look to News24 to bring them news they can trust every day. As we celebrate 25 years, become a News24 subscriber as we strive to keep you informed, inspired and empowered.
Join News24 today
heading
description
username
Show Comments ()
Voting Booth
Do you think corruption-accused National Assembly Speaker Nosiviwe Mapisa-Nqakula will survive a motion of no confidence against her?
Please select an option Oops! Something went wrong, please try again later.
Results
No, her days are numbered
42% - 341 votes
Yes, the ANC caucus will protect her
58% - 477 votes
Vote
Rand - Dollar
18.92
-0.1%
Rand - Pound
23.91
-0.0%
Rand - Euro
20.45
+0.1%
Rand - Aus dollar
12.35
-0.0%
Rand - Yen
0.13
-0.1%
Platinum
911.00
+1.6%
Palladium
1,008.15
+0.6%
Gold
2,222.89
+1.3%
Silver
24.90
+1.0%
Brent Crude
86.09
-0.2%
Top 40
68,346
+1.0%
All Share
74,536
+0.9%
Resource 10
57,251
+2.9%
Industrial 25
103,936
+0.6%
Financial 15
16,502
-0.1%
All JSE data delayed by at least 15 minutes Iress logo
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

LEARN MORE