Virgin Atlantic has announced a second consecutive annual loss, having reported a loss before tax and exceptional items of £26.1m for 2018.
This follows a loss before tax and exceptional items of £49m for 2017.
Virgin expects to report a further loss this year, and to “broadly break even” in 2020 before returning to profit in 2021. Three years is of course a very long time in aviation.
In contrast, BA reported an operating profit of £1,952m and its parent company International Airlines Group reported an operating profit of €3,230m for 2018. By any measure this is a stark divergence in financial performance, even when accounting for the relative size of the two airlines.
BA of course benefits from its transatlantic joint-venture with American Airlines and signifiant cost and revenue synergies with fellow member airlines of International Airlines Group.
Virgin is taking a number of steps to turn around its financial performance.
It will replace its last remaining quad engine Airbus A340 and Boeing 747 aircraft with the Airbus A350-1000 from this year. Delta, which owns 49% of Virgin Atlantic, is to combine its transatlantic joint-venture with Virgin with its joint-venture with Air France-KLM. As part of this, Air France-KLM will acquire a 31% stake in Virgin and will explore broader co-operation beyond transatlantic routes.
Key to the turn around of Virgin’s fortunes will be the need to work with Delta and Air France-KLM to create a strong rival to the American Airlines and British Airways joint-venture for both corporate customers and frequent flyers.
This is unlikely to escape the attention of American and BA which are likely to launch more new direct routes from London Heathrow and look at ground service improvements at Heathrow.