Virgin Atlantic Posts $107 Million Loss on Hit From OlympicsChris Jasper and Kari Lundgren
U.K. billionaire Richard Branson’s Virgin Atlantic Airways Ltd. posted a full-year loss of 69.9 million pounds ($107 million), hurt by higher costs, sluggish economies and a dip in business travel during the Olympic Games.
The main airline unit had a 93 million-pound loss, offset by a 35.4 million-pound one-time gain and a 23.1 million-pound profit from other divisions. The year-ago loss was 80.2 million pounds for the group and 98.6 million pounds at the airline.
Virgin, which aims to boost earnings via a trans-Atlantic alliance with new shareholder Delta Air Lines Inc., reiterated plans for a return to profit by spring 2015. The passenger total increased by 188,000 to 5.5 million in the 12 months ended Feb. 28 and the company is targeting savings of 45 million pounds this fiscal year, mainly from computer and e-commerce functions.
“Last year saw a double dip recession, a continued weak macro economy, and an Olympic Games which, although a fantastic event, severely dented demand for business travel,” said Chief Executive Officer Craig Kreeger, who took over on Feb. 1.
Revenue at the Crawley, England-based company, which competes with British Airways at London’s Heathrow airport, increased 5 percent to 2.87 billion pounds and the load factor, a measure of seat occupancy, gained 1.3 points to 79 percent.
Best-known for its flights to New York and the Caribbean, closely held Virgin added three domestic routes from northern Britain to London Heathrow in March and April.
The “Little Red” services are intended to provide feeder traffic lost when partner BMI merged with British Airways last year, and 27 percent of passengers using the operation are connecting with long-haul Virgin Atlantic flights, Kreeger said.
The 53-year-old CEO is seeking to restore Richard Branson’s best-known brand to profit without hurting its reputation for doing things differently. Cost-cutting measures and the use of Airbus SAS A330-300s 15 percent more efficient than the jets they’re replacing will help with that push, he said today.
“I am confident we have concrete plans in place to take Virgin Atlantic forward and return the business to profitability within a two-year time frame,” Kreeger, an American, said.
Revenue from the company’s cargo business totaled 230 million pounds, while its Virgin Holiday’s unit has boosted forward sales by 6 percent for fiscal year 2014.