Virgin Atlantic makes £80.2m loss due to rising fuels costs
Virgin Atlantic has made a huge loss of £80.2 million after fuel and tax costs soared, the Press Association reported.
The airline founded by Sir Richard Branson reported that passenger numbers grew two per cent to 5.4 million in the year to February despite 'an incredibly difficult market'. The long-haul specialist was boosted by a new route between Manchester and Las Vegas and more flights to the Caribbean.
Compared to a profit of £18.5 million the year before, Virgin Atlantic suffered a loss as it struggled with the 'sky high' fuel costs, which increased to an average of 32 per cent in the year.
Air passenger duty also pushed up the cost of flying and the group said its fees through the duty rose 25 per cent to £195 million in the year.
In its 28-year history, it is believed this is only the third time it has slipped into the red. The last time was two years ago when it was hit by the financial crisis.
The airline, which is owned by the Virgin Group and Singapore Airlines, says it will cut £50 million from its costs but this is not expected to affect its 8,500 members of staff.
Chief executive Steve Ridgway said: 'In an incredibly challenging market, we have managed to grow top line revenues and fly more customers than last year.
'However, with the prevailing uncertainty in the economy, sky high fuel prices and a 25% hike in our air passenger duty fees, converting this sales growth into profit has not been possible.'
Virgin Atlantic announced this year that it is spending £100 million to improve its Upper Class service for business and wealthy travellers and it has six new Airbus A330s due for delivery, which are 15 per cent more efficient than the ones they replace.
The new financial year has seen the group get off to an 'encouraging' start with passenger numbers up 2.3 per cent (1.3 million) in the first quarter, helped by its new routes to Cancun, Mumbai and Vancouver.
Check out the pics of Virgin Atlantic's new Upper Class cabins
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