London - UK billionaire Richard Branson’s Virgin Atlantic Airways Ltd posted its first annual profit since 2011 following a two-year revival plan underpinned by collaboration with US shareholder Delta Air Lines Incorporated.
Pretax profit before one-time items was 14.4 million pounds ($22 million) in 2014, compared with a year-earlier loss of 51 million pounds, Crawley, England-based Virgin said today. Revenue at the carrier, which competes with British Airways at London’s Heathrow airport, reached 2.9 billion pounds.
The tie-up, after Delta bought a 49 percent stake in June 2013, contributed more than 10 million pounds in “bottom line benefit”, with 4.5 million people using joint venture flights, Chief Executive Officer Craig Kreeger said in an interview. The partnership offers Virgin access to Delta’s network across North America, including more than 40 cities beyond New York.
“We’ve seen significant growth in the number of customers connecting onto our airplanes off of Delta airplanes and vice versa,” Kreeger said. “We’re continuing to find ways to drive synergies on the cost side and bed in selling, marketing and scheduling. We expect much more benefit in 2015.”
The CEO has sought to restore Branson’s best-known brand to profit without hurting its reputation for flashy customer service. The Delta tie-up agreed in December 2012 saw the Atlanta-based airline pay $360 million to acquire a stake in Virgin previously held by Singapore Airlines Ltd.
The focus in 2015 will be to deepen work begun last year, including a network revamp announced in September, Kreeger said.
Virgin outlined plans to boost connections and frequencies to key US destinations, including a daily service between Heathrow and Detroit, as well as additional San Francisco, New York and Miami flights. Connections to cities including Tokyo and Mumbai were terminated.
Virgin and Delta will boost peak trans-Atlantic services to 39 daily flights this summer, including 10 trips between London and New York, the most lucrative travel market.
Unit operating costs at Virgin Atlantic were flat year-on-year at constant currencies, with measures including the replacement of out-of-production Airbus Group NV A340s with 16 of the latest Boeing 787 Dreamliners and co-location at key airports helping to drive efficiencies, Kreeger said.
Virgin’s load factor, a measure of seat occupancy, was 77.3 percent, while the passenger total was flat at 6.2 million.
The carrier is about six months away from making a decision on replacing the Boeing 747-400 jumbos that form the heart of its long-haul leisure fleet, though falling oil prices mean that “the urgency of that decision is somewhat less”, Kreeger said. “We’re flying a good airplane for the time.”
An order for Airbus A380 superjumbos was put on hold, with delivery deferred until 2018 at the earliest.
Bloomberg