Virgin Atlantic announces profits rise despite soaring jet fuel costs

Virgin Atlantic, the airline 51% owned by Sir Richard Branson, has bucked the trend in the airline industry by announcing that pre-tax profit before exceptionals are up 38% to £60.9 million for the year to the end of February.

Furthermore Virgin, which specialises in long-haul routes to North America, the Caribbean, Africa and Asia, has benefited from a 22% rise in business class passengers for the year after it pledged to rush travellers through terminal security.

The group flew a total of 5.7 million passengers during the year, an increase of 7.6%.

It added that it acquired passengers from British Airways as a result of the problems at Heathrow’s new Terminal 5.

Shortly after it opened in March, the new £4.3 billion terminal was hit by chaos due to a lack of baggage handlers, this resulted in cancelled flights and thousands of passengers without their luggage.

Other carriers have been badly hit by soaring fuel costs while several airlines have gone out of business this year including ATA Airlines, Aloha Airgroup, EOS, Maxjet, Silverjet and Skybus Airlines.

Meanwhile, the International Air Transport Association recently warned that the airline industry faced a grim outlook and passenger numbers would be affected by surging fuel costs and the deteriorating economic situation.

In related news, British Airways recently announced a partnership with American Airlines and Spanish carrier, Iberia. The joint agreement will allow the carriers to share revenues and costs on transatlantic flights as well as fixing fares.

However, the deal has met with criticism from Sir Richard Branson and he has written to US presidential candidates, Barack Obama and John McCain, warning against the proposed merger.

Commenting on the figures, Steve Ridgway, Virgin Atlantic’s chief executive, said while many airlines are suffering due to the current downturn, those who will profit are the ones offering the best customer service.

Mr Ridgway added that their route network has been diversified and they are focused on providing the best product in Upper Class, Premium Economy and Economy.

Mr Ridgway went on to say that despite the current downturn in the economy and soaring fuel prices, the airline is in a strong position and will survive the current challenging trading environment.

Story link: Virgin Atlantic announces profits rise despite soaring jet fuel costs