Virgin Atlantic Ltd (VAL) Group (Virgin Atlantic Airways) (London) reported its financial results for the calendar year ending December 31, 2013. The results demonstrate strong progress towards the airline’s target to return to profitability by the end of this year, with a pre-tax loss of £51 million ($85.7 million). The airline set out a two year recovery program at the start of 2013 and the improved financial performance in the first year was largely driven by an increased revenue performance and greater operational efficiencies.
These results are based on Virgin Atlantic’s new financial reporting period which now aligns with the calendar year. As a result of the change in financial year, the Group is also disclosing statements to cover a 10 month period for March to December 2013, which show a £7 million pre-tax profit.
Calendar year ending December 31, 2013 Group Performance (pro forma figures given are for the calendar year to aid comparison.)
A Group pre-tax loss over 12 months of £51 million, an improvement of 50% on the calendar year ending December 2012 (£102 million pre-tax loss). The pre-tax result over 10 months was a £7 million profit.
Virgin Atlantic Chief Executive Craig Kreeger has committed to returning the airline to profit by the end of 2014 and has set out a clearly defined strategy to transform the financial performance of the business.
Craig Kreeger said:
“The Group has made good progress in 2013 towards our target of a return to profitability by the end of this year. We have implemented a programme of measures which put in place firm foundations for future success and our results to this point show that we are delivering against our plan.
“Our strategy has been to focus on network, alliances and managing our cost base in a way which has not impacted on the customer. For example, use of a new fuel management system delivered savings of £8m in a single year.
“We have also increased our revenues and passenger numbers, which is the result of both a committed workforce providing exceptional customer service and a loyal customer base with high advocacy. We’re thrilled with the response we’re seeing from our customers.”
The period covered in the accounts published today was a significant one for Virgin Atlantic. During the year it received approval for its Joint Venture with Delta Air Lines and launched a code share agreement with the US carrier. The partnership will deliver significant customer and commercial benefits and allow both airlines to compete more effectively in the transatlantic market.
A new domestic short haul operation, Virgin Atlantic Little Red, was launched to reinstate competition on three routes which had previously been subject to a monopoly – between London Heathrow and Aberdeen, Edinburgh, and Manchester – and give renewed choice for connections to the long haul network.
It was also the first full year in which all 10 of the airline’s twin-engine A330 fleet were in operation. These aircraft delivered significant fuel savings leading to an average 6% less fuel being consumed on each flight when compared with the previous year.
Virgin Atlantic has further key developments planned for this year as it celebrates its 30th year of flying and challenging the status quo. The joint venture with Delta Air Lines is now in place, giving passengers more options to fly than ever before: including 9 flights a day from London Heathrow to New York and onward connections with Delta to 84 US destinations. The first in a fleet of 16 Boeing 787-9 ‘Dreamliners’ will arrive from the autumn, an aircraft which is expected to deliver a step-change for the business and allow the retirement of older four engine aircraft.
There will be noticeable improvements for passengers, with an industry-leading new service training program for staff, and technological improvements such as a wifi roll-out and expanded use of personal electronic devices throughout each flight. Virgin Atlantic recently became the first airline to trial wearable technology with Google Glass, and will shortly rollout a new uniform, designed by Vivienne Westwood, to showcase our customer facing teams in a sharp and colourful way.
Craig Kreeger continued:
“Going forward, the impact from our Delta relationship which greatly enhances our revenue opportunities in the US, improving result from Little Red services and improvements in selling activity, supported by a strong focus on managing the cost base and on fuel efficiency gains, mean we are confident that we will deliver on our target and return to profitability.
“We are building a sustainable and profitable airline for the future and it is an exciting time for our company.”
Copyright Photo: Brian McDonough/AirlinersGallery.com. Virgin Atlantic is basing its financial recovery around the pictured Airbus A330-300 and the upcoming Boeing 787 Dreamliners. Airbus A330-343X G-VGBR (msn 1329) arrives at Washington Dulles International Airport (IAD).