Virgin Atlantic has turned a record loss into a pre-tax operating profit of £18.5 million in the 2010-11 financial year.
But the carrier, which has just struck a new deal with pilots to avert potential strike action this summer, warned of tougher market conditions and “faltering” consumer confidence.
Figures for the year ending February showed passenger revenues up by 13% to £2.7 billion resulting in the move back into the black from a loss of £132 million in the previous 12 months despite the winter closure of Heathrow and the Icelandic ash cloud crisis costing the business a combined £40 million.
Virgin Holidays also recorded a “strong performance” for the past year driven by high demand for its core Orlando and Caribbean holidays. The company is doubling its UK retail network to 120 stores, creating 200 jobs nationwide.
Total Virgin Atlantic revenue for the three months ending May 31 rose by 7.6% year on year to £658 million but no profit figure was issued.
Chief executive Steve Ridgway said: “Since the turn of the year, market conditions have become tougher with increased capacity, faltering consumer confidence and high fuel prices.
“We are also seeing softer trading in the areas that are hit hardest by the continued rises in Air Passenger Duty, particularly the Caribbean routes and Premium Economy cabins. Whilst business traffic remains strong, demand in the economy cabin is more challenged.”
He revealed a £100 million investment in production development on the back of a strong growth in business traffic and solid load factors across all cabins in the year to the end of February.
“We have demonstrated the resilience of our business by weathering the toughest economic period for aviation and have now returned the business to profit,” said Ridgway as he reported the annual results. “A sharp recovery in the first half of the year has been tempered by more challenged trading in the latter period due to increased capacity in the market and high fuel prices.”
No mention was made of potential new investors in the airline, which achieved a load factor of 82% for the 12 months and ended the period with £562 million in cash.
Ridgway said: “Whilst we have been very focused on trading the airline back to profitability, we have worked hard to introduce new aircraft, new routes and extra rotations to the existing network where there has been high demand.
“This year we are investing heavily in new product innovation so that we retain and enhance our leadership in customer service and experience.”
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