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Virgin Atlantic Cuts Full-Year Loss in Half as Result of Delta Alliance

Apr 29, 2014 11:30 am

Skift Take

The trans-Atlantic alliance has expanded Virgin’s network in the U.S. and attracted more premium-class flyers even as competition on the lucrative overseas route heats up.

— Samantha Shankman

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Brendan McDermid  / Reuters

Aircraft models are seen following a news conference to announce the sale of Virgin Atlantic airline to Delta Air Lines, in New York December 11, 2012. Brendan McDermid / Reuters


U.K. billionaire Richard Branson’s Virgin Atlantic Airways Ltd. cut its full-year loss in half as the carrier filled more premium economy seats and gained from new links with shareholder Delta Air Lines Inc.

The pretax loss was 51 million pounds ($85.7 million) in 2013, before exceptional items, compared with a loss of 102 million pounds on that basis a year earlier, the Crawley, England-based airline said in a statement today. Revenue at Virgin, which competes with British Airways at London’s Heathrow airport, increased 4.9 percent to 2.98 billion pounds.

Virgin is using an alliance with Delta to boost earnings and is targeting a return to profit by the end of this year. The partners gained antitrust clearance for joint trans-Atlantic operations last year, giving Virgin access to a network across North America, including more than 40 cities beyond New York. Virgin flew 7.5 percent more passengers in premium economy seats last year, and boosted “Upper Class” numbers by 1.8 percent.

“We have implemented a program of measures which put in place firm foundations for future success,” Chief Executive Officer Craig Kreeger, who came to Virgin from American Airlines in February last year, said in a statement. Virgin saved 8 million pounds with a new fuel management system, and improved its on-time performance to 87 percent, up 6 percentage points.

The CEO is seeking to restore Branson’s best-known brand to profit without hurting the airline’s reputation for flashy customer service. The addition of 16 Boeing Co. 787s from September to replace aging Airbus A340s will help improve efficiency at a carrier known for customer perks such as resort- like lounges and motorcycle pickups, Kreeger has said.

Traveler Amenities

“There will be noticeable improvements for passengers,” the CEO said today.

The Delta tie-up agreed upon in December 2012 saw the Atlanta-based airline pay $360 million to acquire the stake in Virgin previously held by Singapore Airlines Ltd.

Virgin’s load factor, a measure of seat occupancy, rose to 81.6 percent, while the passenger total increased to 6.2 million. The pretax loss for the main airline unit was 39 million pounds, compared with a loss of 124 million pounds in 2012.

Cargo revenue totaled 225.3 million pounds, a decline of 3.4 percent, while the Virgin Holidays unit boosted sales by 8.1 percent.

Virgin today switched reporting financial numbers to the calendar year, and provided pro forma comparables for 2012.

To contact the reporters on this story: Richard Weiss in Frankfurt at rweiss5@bloomberg.net; Kari Lundgren in London at klundgren2@bloomberg.net To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net David Risser, John Bowker.

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