Branson’s Virgin Atlantic Freezes Pay as Fuel Weighs on Earnings
Virgin Atlantic Airways Ltd. imposed a salary freeze for the fiscal year that began March 1 as U.K. billionaire Richard Branson’s flagship brand seeks to cope with the impact of high fuel prices and a sluggish economy.
The step comes five weeks after 53-year-old American Craig Kreeger took over as chief executive officer, tasked with reinvigorating a business that’s also being squeezed by airport charges at its London Heathrow hub and cooperation among rivals.
“Virgin Atlantic is committed to a plan of measured changes, both in the short and long term, which addresses these challenges head on,” the Crawley, England-based company said today in a statement.
Replacing older jets with new planes should also help trim fuel costs, while the sale of a 49 percent stake to Delta Air Lines Inc. (DAL), plus a trans-Atlantic venture, will drive sales, it said. Virgin had a loss of 135 million pounds ($201 million) in the year to Feb. 28, the Sunday Times said yesterday, citing an internal memo, versus an 80.2 million-pound loss in fiscal 2012.
Virgin, which competes with British Airways (IAG) at Heathrow, will begin flights from Europe’s busiest airport to Scotland and northern England next month, securing feeder traffic for long- haul routes that it lost with BA’s purchase of its former ally BMI from Deutsche Lufthansa AG last year.
The hub’s owner, Heathrow Airport Ltd., has proposed a 41 percent increase in passenger charges over the next five years as part of a five-year, 3 billion-pound plan to complete the new Terminal 2 facility, add taxiways and retool baggage systems.
Heathrow’s landing, parking, noise and emissions fees for an Airbus SAS A320 jet exceeded the equivalent of $25 last July, compared with $17 at Frankfurt airport and $16 at Amsterdam Schiphol, according to International Air Transport Association figures cited by Virgin, which says it’s being pressured by “some of the most expensive airport charges in the world.”
Airbus A320 planes will be used on Virgin’s new domestic services, to be operated by Ireland’s Aer Lingus Group Plc.
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