Virgin Atlantic Says Brexit to Demote London; May Move Jetsby
Banking, tech sectors would favor the Continent, CEO Says
Depressed pound could lift fuel bill, damage outbound travel
Virgin Atlantic Airways Ltd. will suffer a slump in demand if Britain exits the European Union as international businesses desert London for major cities still inside the 28-nation bloc, according to Craig Kreeger, the U.K. carrier’s American chief executive officer.
A longer-term dip in sales might mean evaluating the case for exiting some markets and targeting entirely new ones, Kreeger said in an interview.
Trans-Atlantic flights, which account for 70 percent of Virgin’s total capacity, could see bookings slide as U.S. companies favor locations such as Paris and Frankfurt, which it doesn’t serve, the CEO said.
“Most travel-intensive businesses -- consulting, banking, technology -- can make a pretty good argument that London right now is the center of Europe,” he said. “If Brexit has a risk that’s easy to understand, it’s the possibility that that center would move east to the larger European open market.”
A victory for the “Leave” campaign in a referendum on June 23 would also prompt a further weakening of the pound, increasing costs for U.K. airlines that pay in dollars for fuel accounting for 40 percent of total expenses, Kreeger said Wednesday in London.
U.S. Off Menu
“The long-term impact is whether the economy weakens in a way that makes it just too hard for more Brits to travel, particularly on long-haul vacations to the United States, which is kind of a big part of our business,” he said.
Virgin Atlantic, owned by billionaire Richard Branson, has yet to establish a definitive contingency plan as a Brexit vote would likely be followed by at least two years of negotiating before the actual schism, Kreeger said.
In that time, the Crawley, England-based carrier, 49 percent owned by Delta Air Lines Inc., with which it operates a profit-sharing agreement on U.S. flights, would gauge changes in demand and develop options for focusing on different markets where appropriate.
“Our assets are mobile,” Kreeger said. “If I see demand in a certain market go down, I can take the airplane and fly it somewhere else.”
The CEO said he has communicated his views on the likely impact of a Brexit decision to Virgin Atlantic employees in a letter.