Virgin Atlantic annual financial results confirm the successful delivery of the airline’s two year recovery plan and a return to profit.
For the year ended 31st December 2014, the Group is reporting a profit before tax and exceptional items of £14.4m, representing an improvement of £65.4m on the previous year’s financial performance (£51.0m pre-tax loss in 2013).
The results confirm that Virgin Atlantic has delivered on the target it set in February 2013 to return to profit within two years.
Virgin Atlantic group revenue was £2.9bn in 2014, with airline unit revenue up 0.5% (up 3.5% at constant currency). The airline flew 6,156,000 passengers during the year, with an average revenue passenger load factor of 77.38%. The airline’s on time performance remains high with 85.5% of flights departing within 15 minutes of schedule.
Chief Executive Craig Kreeger said: “We want to be the airline most loved by our customers by always putting them at the centre of everything we do. These profitable results mark the successful conclusion of our recovery period and have put firm foundations in place for the future. We are confident that we have the right fleet, network and partners in place to be more profitable than ever before by 2018.
“We had a clearly defined strategy to transform the financial performance of the business and everyone involved can be rightly proud that we delivered that in a rigorous timeframe, while investing in continuous improvements to our passengers’ experience. I would like to thank our customers for their support, and our people for delivering the exceptional customer service that remains uniquely Virgin Atlantic.”
In October, the airline took delivery of the first 787-9s, with seven more to follow in 2015 as part of a fleet regeneration programme.
Virgin Atlantic and its customers gained significant benefit from its joint venture partnership with Delta Air Lines, launched in January 2014. Over 4.5million passengers flew on joint venture services in its first year of operation and the two airlines expect this number to continue to grow in 2015. The partnership’s total number of code share routes recently increased to 484 and its peak daily transatlantic services will rise to 39 from summer 2015. This includes ten daily departures between London and New York – the world’s busiest business travel market.
The increased transatlantic flying follows a network review undertaken by Virgin Atlantic in 2014 which led to its exit from several loss-making routes. The airline also took the decision to withdraw its domestic operation Little Red, with flights between Heathrow and Manchester ceasing later this month and Heathrow and Edinburgh and Aberdeen stopping in September 2015. New routes will be launched this summer between Manchester and Atlanta, London Heathrow and Detroit, and London Gatwick and Tobago, as well as a series of seasonal flights between Belfast and Orlando and Glasgow and Las Vegas. There will also be increased frequency in services between Heathrow and major US destinations including San Francisco, Los Angeles, Atlanta and New York.
Virgin Holidays' revenue and profit improvements were driven by a strong performance in its key North American market, where turnover grew by more than 10%, and disciplined cost control across the business. The company also enjoyed a four-point increase in its Net Promoter Score. During 2014, it implemented a new five-year plan to drive customer satisfaction, staff engagement and profitability to record levels by 2019.
Virgin Atlantic President, Sir Richard Branson, said: “I can’t think of a better way to complete our 30th birthday year than with a return to profit. The team at Virgin Atlantic has done a great job in turning around the airline and has the right strategy to take the business from strength to strength. Keeping our customers and our people at the heart of everything we do gives me great confidence in our future and I look forward to the next 30 years.”
Virgin Atlantic Cargo reported revenues of £221 million for 2014. UK revenues grew 6% over 2013, while Europe recorded 5% growth. Overall, Virgin Atlantic carried 224,139 tonnes for the year as a whole, matching its result for last year despite a reduction in capacity due to route and aircraft changes. The airline’s load factor of 74% continued to be well ahead of the industry average.
John Lloyd, Virgin Atlantic’s Director of Cargo, said: “When you look at the industry as a whole, our business and share of the market has remained resilient for each of the last five years in what remains a very challenging operating environment. IATA data shows that cargo revenues for the industry were basically unchanged at $62 billion in 2014 and are still $5 billion below their 2011 peak. Overall, we held our position well last year and achieved a slight increase in our market share thanks to continuing high load factors, which enabled us to make another strong contribution to the airline’s financial results.”
Other highlights for the year included a 16.8% increase in revenues from the carriage of high value cargoes and a 20% growth in cargo generated for Virgin Australia’s long-haul international services to and from Sydney and Brisbane to Los Angeles. Virgin Atlantic has operated as Virgin Australia’s international cargo general sales agent since 2009. Shipments of fish, fresh fruits and other perishables from South Africa to the UK rose 30% year-on-year, while Boston reported the biggest increase in tonnage of the airline’s North American routes, rising 32% over 2013. The airline’s newest transatlantic route of Atlanta, which commenced at the end of October, got off to a flying start with a load factor of over 70%, carrying shipments such as pharmaceuticals, diesel engines, fresh fish, fruits and vegetables.
“With Detroit joining the Virgin Atlantic network in June and, before then, the introduction of additional frequencies to Atlanta, New York JFK, Los Angeles, San Francisco and Las Vegas, the airline is “quite confident for the year ahead,” John added.
He said: “Detroit will give us another gateway in the US Midwest and reinforces our strong commitment to customers on both sides of the Atlantic. It remains an extremely competitive market but we are adding capacity on routes where we are already well established as a high quality carrier or in new markets like Atlanta and Detroit where we can see good cargo potential. Through our transatlantic joint venture with Delta Air Lines we will be able to offer customers a choice of 245 departures a week to and from 19 destinations.”