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Virgin Atlantic expects to report an annual profit for the first time since the pandemic, as strong demand for winter breaks in the Caribbean fuels a recovery that has lagged that of rivals.
The airline’s rebound has been slowed by the cost of servicing the more than £1bn it took on to survive the coronavirus pandemic, which prompted governments to close the skies and plunged the industry into crisis.
“Sustained consumer demand” across its network of long-haul flights was driving its recovery, according to the airline, which is majority owned by Sir Richard Branson’s Virgin Group.
Launched in 1984, Virgin Atlantic has long traded on a glamorous image aimed at high-spending holidaymakers, a section of the market that has proved particularly strong since the end of pandemic border restrictions.
Oliver Byers, Virgin Atlantic’s chief financial officer, said on Wednesday that passengers were willing to pay “robust” fares, and that Virgin Atlantic had benefited from especially strong demand for flights to the Caribbean over the winter.
US tourists have since been booking spring and summer trips to Europe in high numbers, alongside “continued demand” from UK travellers in premium seats.
The airline aims to fly 6mn passengers this year — a level it last achieved in 2019 — after carrying 5.3mn last year. On Wednesday it highlighted “very strong demand” from leisure travellers flying in premium cabins as well as from corporate customers, where demand has returned to about 80 per cent of pre-pandemic levels.
A four-year turnaround plan launched in 2022 to become “sustainably profitable” was on track, the carrier said, adding that it would continue to focus on “cost discipline”.
But in contrast to its major competitors, the airline remained unprofitable last year. It reported a loss of £139mn, albeit an improvement on its £206mn loss in 2022. Revenues hit a record £3.1bn last year, up by £265mn from 2022.
International Airlines Group, the owner of Virgin’s rival British Airways, reported record annual earnings last year, as operating profits more than doubled to €3.3bn.
Byers said Virgin Atlantic’s performance was weighed down by higher interest rates, as the airline continues to pay back the debt it took on during the pandemic.
After being denied access to government funds, Virgin Atlantic was forced to raise more than £1bn from the private sector. Byers also pointed to the drag from higher fuel prices.
The Virgin Group owns 51 per cent of the airline, while the remaining 49 per cent is held by US carrier Delta Air Lines. Since 2020, Virgin has achieved £300mn in annual cost savings, including job cuts.
Alongside its historic focus on North America and the Caribbean, Virgin Atlantic has also expanded into India, hoping to capitalise on the country’s growing economy and population, and diaspora, many of whom currently fly to India via the Gulf.
Virgin Atlantic said on Wednesday that it would add a second daily flight from London to Mumbai from October, its fifth daily service to the country.
