The carrier said the effect of the Delta and Omicron variants of Covid-19, and accompanying travel restrictions, had slowed the rebound that got under way in the autumn.
Such was the delay and subsequent curtailment in demand, Virgin on Wednesday (6 April) said it now did not expect to return to profitability until 2023.
However, it said that the pandemic "continued to weigh heavily" on the firm’s financial performance, it expected the rate of recovery to increase now travel has resumed.
"In 2022, losses are expected to significantly narrow again as passenger demand and international travel returns at scale," said Virgin, with 2022 due to be the first year of the brand’s four-year Velocity business plan.
Virgin underwent a £1.2 billion solvent recapitalisation in September 2020, which chief executive Shai Weiss said was underpinned by more than £300 million in annual structural cost savings.
"However, with ongoing restrictions and the rapid spread of the Delta and Omicron variants, customer demand was materially impacted and the year became even more challenging than previous, despite the vaccine rollout," said Weiss.
Virgin on Wednesday revealed a full-year loss (year to 31 December 2021) of £594 million before tax and exceptional items; total revenue came in at £928 million, up £60 million on 2020 but far short of the £2.9 billion it took in 2019.
It ended 2021 with £580 million in cash, achieved – said Virgin – thanks to £670 in new capital, including £400 million investment from shareholders; the £300 million cost savings; and the ability from November 2021 to start "capitalising on pent up demand following the opening of the transatlantic corridor".
"These actions narrowed statutory losses by £378 million versus 2020 to £486 million in 2021, and helped to set the airline up for success in 2022," said Virgin.
Additionally, Virgin said the reopening of the UKUS transatlantic travel corridor in November had allowed the airline to ramp up operations in the final quarter, welcoming back more than 1,100 air crew and pilots "from holding pools created as part of the 2020 response to the pandemic".
Weiss continued: “Persistent volatility in international travel, fuelled by ever-changing restrictions and testing requirements, resulted in significant losses and a decline in passenger numbers, with an improvement in November as our heartland destinations in the US opened up to UK travellers following months of cross-industry campaigning to open the skies.
"The completion of £400 million shareholder investment in December 2021 sets us up for success in 2022, as we take advantage of the return of customer demand. We have much to look forward to, from the launch of a new route to Austin, Texas in May – our first new US route in five years – to the introduction of the A330-900 in the autumn."
He also paid tribute to Virgin’s staff for their spirit. "Together we turn our focus to the opportunity ahead and look forward to 2022 as a year of transition, from survival to recovery and on to profitability by 2023," Weiss added. "While we have learned we can’t predict the future and there will be significant challenges ahead, the outlook is full of promise."
Virgin chief financial officer Oli Byers said the carrier’s 2021 financials reflected the continued challenges posed by Covid-19, with aviation set to be among the first sectors to be hit and the last to fully recover.
“2022 will be a year of transition as we move from survival into recovery and capitalise on the return of customer demand," he said. "We have cause for optimism balanced with macro-economic and political uncertainty, alongside the residual risks of the pandemic. We anticipate a return to profitability in 2023, driven by a recovery in air travel demand and more than £300 million annual cost savings, already delivered."
