Virgin Atlantic has warned “significant external headwinds” could result in annual losses this year, following a turbulent 2016 with increased competition, rises in fuel costs and fall in value of the pound after Brexit.
The airline, founded and still backed by Richard Branson, warned of the losses as it published its financial results for last year. It showed Brexit cost the business more than £50 million after the devaluation of the pound.
Despite this, Virgin Atlantic Group posted a 2 per cent jump in underlying pre-tax earnings to £23 million for 2016.
The airline, which touched down on its maiden Heathrow-Seattle flight on Tuesday, flew 5.4 million passengers last year and improved its load factor by 1.9 per cent to 78.7 per cent. However, there was a year-on-year reduction in airline passenger unit revenue of 4.3 per cent.
“We are satisfied with our performance in an environment that saw increased competition, with a 6 per cent increase in transatlantic market capacity, and a rise in Brent crude prices of more than 50 per cent through the course of the year,” said Virgin Atlantic chief financial officer, Tom Mackay.
“A decline in both bookings and the rate of the pound following the EU referendum materially impacted our revenues, but through sensibly managing capacity and network, our load factors increased and we grew our UK point of sale market share on our routes. We were also disciplined on cost control,” said Mackay.
Virgin Atlantic CEO Craig Kreeger said: “This was a year in which we faced significant external headwinds, so improving our profit and growing our market share in this challenging environment is testament to the hard work of our teams.
“We remained focused on our customers, with the second year of a three year £300m investment programme, and delivered our best ever year operationally.
“We are committed to flying a younger and more fuel efficient fleet and in 2016 took delivery of four fantastic new Boeing 787-9s, while placing an order for 12 Airbus A350-1000s, which at list price value at $4.4bn.
“This investment sees our entire fleet replaced in a decade and will help our passengers to enjoy an even better experience with us. It remains an absolute focus for us to continue to improve customer satisfaction moving forward," said Kreeger.
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