Virgin Atlantic performance hit by hurricane disruption

Virgin Atlantic performance hit by hurricane disruption

Flight disruption due to last month’s hurricanes has set back a recovery at airline Virgin Atlantic, chief executive Craig Kreeger disclosed yesterday. 

The airline warned in March it expected to fall into a loss this year after three years of profits, but last month Kreeger said demand for summer travel had held up better than expected, despite a weaker pound. 

But some of that improvement has been eroded since Hurricane Irma struck resorts in the Caribbean and hit the east coast of the US, with other storms, such as Hurricane Maria, causing further disruption. 

“Hurricanes, beside from the very personal and real devastation in many places we fly, have certainly had an impact on our business, which will make the end of the year a little weaker than we’d (recently) anticipated,” Kreeger told Reuters on the sidelines of the CAPA Centre for Aviation global summit in London. 

“The end of the year looks like it will be way better than we thought at the beginning of the year, but maybe not quite as strong as we were on the trajectory to hit prior to the hurricanes.” 

Kreeger said the hurricanes had affected the cost of jet fuel production, as well as causing the cancellation of flights and leaving customers needing accommodation. 

Overall, he said the pricing outlook for the coming winter was “not buoyant, and it’s not bad. It’s fine.” 

Virgin Atlantic’s caution earlier in the year was due in part to concerns over a drop in the pound following the Brexit vote as well as increased competition in the sector. 

Bracing for this competition, Delta Air Lines, Air France-KLM and Virgin Atlantic unveiled plans in July to combine two overlapping transatlantic joint-ventures, supported by equity deals worth $1 billion. 

Kreeger said that contract language for the deal was due to be negotiated by the end of the year, and then there would be an application for antitrust immunity to US authorities. 

“We’re anticipating it will still be late 2018 … when we’ll actually close the transaction,” he said

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