UK airline Virgin Atlantic expects to become profitable in 2023 after coming through an “intensely challenging year” in 2021.
The long-haul carrier made a loss of £486 million in 2021 as the Covid-19 pandemic dragged on into a second year. Although this was an improvement on the airline’s loss of £864 million in 2020.
Virgin Atlantic saw a small increase in revenue of £60 million in 2021 compared with 2020, as total revenue reached £928 million, but this was still way off its pre-Covid 2019 revenue of £2.9 billion. Passenger revenue last year only reached £410 million, just 20 per cent of 2019’s sales.
More positively, Virgin has benefited from the reopening of transatlantic routes to the US in November 2021, which released “pent-up demand” for its flights and allowed passenger revenue to climb to 42 per cent of 2019 levels in the final quarter of 2021.
Shai Weiss, Virgin Atlantic’s CEO, said 2022 would be a year of “transition” for the airline as it starts its four-year Velocity business plan to become “sustainably profitable” in the years ahead.
“The completion of £400 million shareholder investment in December 2021 sets us up for success in 2022, as we take advantage of the return of customer demand,” he said.
“We look forward to 2022 as a year of transition, from survival to recovery and on to profitability by 2023. While we have learned we can’t predict the future and there will be significant challenges ahead, the outlook is full of promise.”
The airline still expects to stay in the red during 2022 but forecasts these losses to “significantly narrow again as passenger demand and international travel returns at scale”, before returning to profit next year.
Oli Byers, Virgin Atlantic’s chief financial officer, added: “Our 2021 financial results reflect the continued challenges faced by our industry due to the Covid-19 pandemic - aviation was one of the first industries to be affected and remains one of the last to fully recover.
“During 2021 we successfully raised over £670 million of new capital and ended 2021 with a robust cash position of £580 million.”
The airline’s chief commercial officer Juha Jarvinen predicted in September 2021 that it would take until 2024 for its corporate business to return to pre-pandemic levels.