Page last updated at 09:25 GMT, Tuesday, 26 May 2009 10:25 UK

Profits jump at Virgin Atlantic

Virgin's Steve Ridgway on the company's success

Virgin Atlantic has reported a sharp rise in profits in the year to the end of February, bucking the trend seen by other airlines.

Annual pre-tax profits reached £68.4m ($109m), nearly double the £34.8m seen in the year earlier.

It said the results had been helped by a rise in premium fare passengers.

The results are in contrast to other airlines, including British Airways which reported an annual loss before tax of £401m last week.

BA said the level of premium fare travellers had fallen by 13% in the second half of its financial year and it had seen a rise in fuel costs.

Fuel costs

Virgin Atlantic chief executive Steve Ridgway said: "We are winning market share from our competitors during the toughest trading environment ever."

Talking to the BBC, Mr Ridgway added that successful hedging of fuel had helped the firm. Hedging involves buying fuel at set prices in advance to avoid fluctuations in costs on the open market.

During the year, the price of oil veered from as much as $147 a barrel to as little as $38. The carrier spent close to £1bn on fuel for the year.

Tony Dixon, editor of Airliner World magazine, said hedging successfully was a key factor in boosting profits.

Conversely, airlines can be hard hit if they buy fuel "at the wrong time", as Ryanair did, he added.

Another factor hitting airlines in recent months, including BA, was the weaker pound, as fuel is bought in dollars.

Mr Dixon said the outlook for 2009/10 was likely to be better for airlines, amid signs that fuel prices were more stable now than last year and the pound had recovered against the dollar.

Volatile

Sir Richard Branson, the president and founder of Virgin Atlantic, said: "The last financial year has proven to be the most volatile yet in our 25-year history."

"To increase profits against a backdrop of such a severe recession is an excellent achievement by all of our staff at Virgin Atlantic."

But Mr Ridgway warned: "This year is going to be tough," adding that the airline would "cut costs as aggressively as possible".

Group sales, which include sales from tour operator Virgin Holidays, increased by 8.4% to £2.579bn from £2.38bn in the year before.

Virgin Atlantic is challenging a possible tie-up between BA and American Airlines, citing competition concerns.

The airline, which employs about 8,500 staff, is 51%-owned by Sir Richard Branson with Singapore Airlines owning the rest.



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