Virgin slips into the red

Virgin slips into the red
By admin

Virgin Atlantic has become the latest airline to slide into the red in an “incredibly difficult market”.

The British carrier, which operates daily flights from Sydney to London via Hong Kong, reported a pre-tax operating loss of 80.2 million GBP (A$118.6m) in the year to February 29.

It made a profit of 18.5m GBP (A$27.3) last year.

Passenger numbers climbed 2% to 5.4 million and revenues increased 3% to 2.74 billion GBP (A$4b).

But chief executive Steve Ridgway said the growth could not push the airline into the black as “sky high” fuel costs again hammered profitability. Before hedging, Virgin’s fuel bill soared 32%.

“In an incredibly challenging market we have managed to grow top line revenues and fly more customers than last year,” he said. “However, with the prevailing uncertainty in the economy, sky high fuel prices and a 25% hike in our air passenger duty fees, converting this sales growth into profit has not been possible.”

Despite the loss, Ridgway said there would be “no let up” in Virgin Atlantic’s product investment with a 100 million GBP (A$148m) program of Upper Class enhancements unveiled in February.

He added that the 2012/13 financial year has got off to an “encouraging start”, with revenues up almost 6% and passenger numbers up 2.3%.

He also flagged its new Vancouver and Cancun routes as growth drivers while the introduction of new A330s will help the carrier use 15% less fuel per seat.

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