| March 28
March 28 British airline Virgin Atlantic Ltd
warned on Tuesday that it expects to fall back into loss this
year after three years of profits, as competition intensifies,
fuel costs rise and a cheap pound takes its toll on the
Chief Executive Craig Kreeger put the impact on profits of
Britain's decision to leave the European Union at around 50
million pounds after the carrier reported a 2 percent increase
in underlying pretax profit for 2016 to 23 million pounds ($29
million). It had originally expected a significant increase in
profits for 2016.
Virgin Atlantic, which is owned by founder Richard
Branson's Virgin Group with 51 percent and U.S. carrier
Delta Air Lines on 49 percent, typically sells more of
its tickets to customers in Britain than elsewhere and the fall
in sterling following the Brexit vote affected both revenues and
profits last year.
With the weak pound making it more expensive for Britons to
travel abroad, Virgin Atlantic is now seeking to increase ticket
sales to customers based in the United States, Hong Kong and
China. After Delta bought its stake in Virgin from Singapore
Airlines for $360 million in 2013 it put a new
emphasis on transatlantic routes.
"The UK has never been a better bargain," Kreeger told
"We are selling much more agressively to foreign points of
sale. But even that feels like it won't be enough," he said.
Adding to pressure on established carriers is increased
competition for transatlantic passengers. Virgin Atlantic said
capacity as measured by the number of seats available
industry-wide on transatlantic routes rose 6 percent, while its
own capacity increased by around 2 percent in 2016.
Low-cost carriers such as Norwegian Air Shuttle,
Canada's Westjet and Iceland's Wow Air are stepping up
expansion on routes between North America and Europe, forcing
the traditional carriers to take action.
British Airways and Iberia owner IAG this month
unveiled plans for a new low-cost long-haul unit called Level
that will fly out of Barcelona from June 2017, while Lufthansa
has been expanding its Eurowings brand and US carriers
have introduced new fares that don't include baggage or seat
Virgin Atlantic is planning to reduce capacity on
transatlantic routes by 1 percent this year but Kreeger said the
airline had no plans to follow rivals with a low-cost long-haul
"We have competed agressively on price. Our goal is to make
sure we are as efficient an airline as we can be on the cost
side," he said.
Boosting its cash, Virgin Atlantic raised a further 32
million pounds in January via a further bond deal that uses its
take-off and landing slots at Heathrow as collateral, taking the
total value of the loan notes it has issued since 2015 against
Heathrow slots to 252 million pounds.
Kreeger said Virgin Atlantic was not planning to make any
decision on whether to order more planes this year but was
retaining its options to acquire six A380s, Airbus's
biggest airliner, a long-deferred deal which many analysts
expect will eventually be cancelled.
($1 = 0.7943 pounds)
(Reporting by Victoria Bryan in Berlin; Editing by Greg