Virgin Atlantic expects profitability to return in 2023

Virgin Atlantic Ltd. has reported a decline in revenue for 2021, when compared to 2019 figures, the last year in which the airline operated a full year of
service before the COVID-19 pandemic disrupted flights in 2020.

In its financial results for the year ending December 31, 2021, the air carrier said its results reflected “an intensely challenging year” and “continuation of the immense challenges the airline industry faced due to the COVID-19 pandemic.

For the period under review, the UK-based airline reported total revenue of £928 million (about BDS$2.38 billion), up £60 million on 2020, yet down from £2.9 billion in 2019; an EBITDA loss of £166 million; and a loss of £594 million before tax and exceptional items.

Virgin Atlantic ended the year with a robust cash position of £580 million, delivered by raising £670 million in new capital, including £400 million shareholder investment completed in December 2021; maintaining £300 million annual cost savings; capitalising on pent up demand following the opening of the transatlantic corridor; and delivering record cargo revenue of £448 million, the airline said.

It noted that “those 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”.

“As the airline ramped up operations in the final quarter of the year, it was able to welcome back more than 1,100 crew and pilots from holding pools created as part of the 2020 response to the pandemic,” the airline said in its financial report.

Due to continued travel restrictions, the officials are now expecting profitability to return in 2023, although it expects the losses this year to significantly narrow again as passenger demand and international travel continue to return to scale.

Chief Executive Officer of Virgin Atlantic Shai Weiss pointed out that with ongoing restrictions and the rapid spread of the Delta and Omicron variants of the COVID-19, customer demand was materially impacted and the year became even more challenging than previous, despite the vaccine rollout.

“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,” said Weiss.

“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, continuing the transformation of our fleet into the youngest and cleanest in the sky,” he said.

Meanwhile, Chief Financial Officer of Virgin Atlantic Oli Byers said “our 2021 financial results reflect the continued challenges faced by our industry due to the COVID-19 pandemic. Aviation was one of the first industries to be affected and remains one of the last to fully recover”.

He said: “2022 will be a year of transition as we move from survival into recovery and capitalise on the return of customer demand. 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”. (PR/MM)