Virgin Atlantic swings into the red after tough 2017
The carrier posted underlying pre-tax losses of £28.4 million for 2017, against profits of £23 million in 2016.
Airline Virgin Atlantic nosedived into the red last year after taking a hit from the Brexit-hit pound, hurricane disruption and engine woes that grounded some of its planes.
The carrier – founded by Sir Richard Branson 33 years ago – was left nursing underlying pre-tax losses of £28.4 million for last year, against profits of £23 million in 2016.
It marked it first loss for four years and came amid “significant operational challenges and a difficult economic backdrop,” according to the group.
Virgin Atlantic carried 100,000 fewer passengers last year, at 5.3 million, as the pound’s collapse following the Brexit vote knocked demand from UK travellers, despite boosting US customers flying to Britain by 20%.
Its load factor – a key measure for how well airlines fill their planes – also slipped, down to 78.3% from 78.7% in 2016.
As well as the sterling woes, the group was impacted further by faults with Rolls-Royce Trent 1000 engine parts, which led to some of its Boeing 787 Dreamliners being grounded.
The issue has impacted a raft of airlines, also including British Airways, and saw Rolls recently warn over a charge of around £340 million it will take this year for the cost of repairs to fix the faults.
A devastating hurricane season also compounded Virgin Atlantic’s problems, with storms such as Irma causing havoc across the Caribbean and Florida Keys.
Craig Kreeger, chief executive of Virgin Atlantic, said: “There were three big external issues that we had to deal with in 2017; the full year impact of a weak sterling relative to the dollar, an industry-wide engine supply issue and severe hurricane disruption in the Caribbean and US.
“While some of these challenges will remain prevalent in 2018, we will stay focused on delivering for our customers.”
Virgin Atlantic is now hoping the launch of three new economy products this spring will help lead its fight back.
It said the new options – economy delight, economy classic and economy light – will offer customers more choice and a lower price point.
Annual results for the group also showed profits dropped sharply at its Virgin Holidays business, down 19% at £15.5 million, despite a 1.5% increase in customers to 397,000.
Virgin Atlantic, which is now 49% owned by Delta Air Lines, is headquartered in London and employs more than 9,000 people worldwide.