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15 Mar 2018

BY Gary Noakes

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Virgin Atlantic Group plunges into the red after difficult 2017

Virgin Atlantic Group has blamed sterling’s weakness, hurricanes and engine replacement problems with its Boeing 787s for plunging into a loss last year.

Craig Kreeger (Virgin Atlantic)
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Virgin Atlantic Group plunges into the red after difficult 2017

The group made a pre-tax loss of £28.4 million, compared with a £23 million profit in 2016. The loss comes despite a £15.5 million contribution from Virgin Holidays.

 

Virgin Atlantic chief executive Craig Kreeger 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.”

 

The engine issue relate to the reliability of its Boeing 787s, which means that fan blades have to be replaced more frequently than normal, during which aircraft have to be grounded and replacements found.

 

The carrier predicted that it would make a 2017 loss 12 months ago as it struggled to cope with the falling value of the pound. The group’s 2016 result was its best in five years.

 

During 2017, the group carried 5.3 million passengers, 100,000 fewer than the previous year and saw revenue of £2.66 billion, down from £2.69 billion. Load factors fell 0.4 percentage points to 78.3%.

 

Virgin’s fleet size remained the same at 39 aircraft. One bright spot for the airline was that sterling’s weakness led to a 20% increase in passengers from the US.

 

Kreeger said some of the issues it faced last year “will remain prevalent in 2018”, but said changes to the economy product, with the introduction of hand luggage-only fares and growth in the cargo business would help.

 

This year will see Virgin complete delivery of its fleet of 17 Boeing 787-9s and prepare for 12 Airbus A350-1000s, which will join in 2019. A second daily service to Johannesburg will commence next winter.

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