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.
Virgin is, after a period of focusing on North America, return to growth with the launch of Sao Paulo and Tel Aviv. The airline has also, through a consortium, acquired Flybe.
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.
Virgin Atlantic has unveiled its new “Upper Class” business class cabin which will feature on its new Airbus A350-1000 aircraft.
This is the first major redesign of Virgin Atlantic’s business class cabin since it introduced the Upper Class Suite in 2003 with its reverse herringbone design.
Like the Upper Class Suite, all seats benefit from direct access to the aisle. However, that is where the similarity ends. This is a radically new design with forward facing seats in a 1-2-1 configuration. Whilst this has been adopted by many airlines one significant difference is that all seats face outwards towards the window, whereas on other airlines centre seats tend to face inwards.
The seat is 20″ wide and is 82″ long at its full length. This is 3″ longer than BA’s new Club Suite. All seats benefit from improved, albeit not complete, privacy as the seat has a sliding screen. There is also greater personal storage at shoulder level and a larger 18.5″ TV screen. Significantly for Virgin, it is no longer necessary to step out of the seat to “flip it over” from seat to bed mode.
There will be 44 Upper Class seats on the first Airbus A350s for London Heathrow. Like the existing BA Club World and Virgin Upper Class seats there are differences in configuration and style and much of these will be a personal preference.
Virgin also promises improved bedding and toiletries, with the added ability to pre-order pyjamas in your preferred size.
As is to expected from Virgin Atlantic the cabin features its signature colour scheme. A word of caution when judging the exact colour scheme from official press shots. Some early images provided to some outlets looked like they had slightly different colour schemes and whether intentionally or otherwise this looks to be the work of Adobe Photoshop’s auto processing tools!
The Upper Class bar is no more
One of the biggest changes is that Virgin has abandoned its signature Upper Class bar.
This will be replaced by an 8 seat lounge area dubbed “The Loft” at the entrance to the aircraft. This features a dedicated 32″ TV screen, with the ability to listen to its audio via bluetooth headphones, and a small stand-up work area.
Premium & Economy
Also on Virgin’s A350-1000 aircraft are new Premium (formerly premium economy) and economy cabins.
There will be 56 new Premium seats in a 2-4-2 configuration.
Passengers will benefit from a larger 11.4″ TV screen which can be controlled without the need to press against the screen.
In economy, there are 235 seats in 3-3-3 configuration. 36 of these seats will be “Economy Delight” seats with 34″ of legroom. As is to expected, all seats will have at seat power and USB charging ports.
In total there will be 335 seats (44-56-235) on Virgin’s Airbus A350-1000s at Heathrow. This compares to 331 (56-56-219) on BA’s Airbus A350-1000s.
Virgin Airbus A350 Routes
Virgin has said that its first Airbus A350s will fly to New York JFK from the summer.
This may focus BA’s mind when choosing which routes will operate with four class Boeing 777-200s retrofitted with the new Club Suite as these aircraft already operate on some flights to New York JFK. History has shown that new business class cabins can have a significant impact on market share.
Delta and Virgin Atlantic have announced that the two airlines are to jointly fly from London Gatwick to Boston and New York JFK from 2020.
There’s a curious lack of detail in the announcement. Neither Delta nor Virgin Atlantic have confirmed which airlines will operating the routes, though Delta’s press release intimates that it will operate at least one of the routes. There’s also no mention of whether this will be a seasonal or year-round route, nor which aircraft will be used. In any event, eligible passengers will benefit from Virgin Atlantic ground facilities at Gatwick such as its Clubhouse in the North Terminal.
For Delta, this will mark a return to London Gatwick which it first served on 1 May 1978 flying to New Orleans via Atlanta using a Lockheed L-1011 TriStar aircraft. Virgin Atlantic launched daily flights from Gatwick to New York JFK in September 1989, and Boston in May 1991, before transferring both routes to London Heathrow after securing access to the airport in July 1991.
It is no accident that this announcement has been made ahead of a press event next week JetBlue which is expected to unveil plans to launch transatlantic flights to Europe. JetBlue has made no secret of its plans to launch transatlantic flights. It has been lobbying US regulatory authorities for slots at London Heathrow to be released as condition of Delta merging its transatlantic joint-ventures with Air France-KLM and Virgin Atlantic into one. However, this has yet to be concluded.
Boston is currently served from Gatwick by Norwegian. New York JFK is also served by BA and Norwegian. Whilst Delta is keen to emphasise its overall strength in Boston, London – Boston is a very important route for BA. Given BA serves Boston four times daily from Heathrow it would be surprising if it did not make a similar competitive response, should JetBlue announce plans to fly to Boston from Gatwick. These moves will of course place significant competitive pressure on Norwegian at Gatwick. JetBlue’s announcement on Wednesday 10 April 2019 is eagerly awaited.
On Monday 8 April 2019, Virgin Atlantic is expected to unveil its new Upper Class suite for its forthcoming Airbus A350-1000 aircraft.
As Virgin Atlantic’s top tier cabin. Upper Class has always featured prominently across the airline’s advertising since its formation in 1984. To use marketing speak, it serves as a “brand halo” for the airline. Virgin Atlantic has consistently marketed the cabin as distinctive from rival airline’s business class, even claiming it offers a First Class service for a business class price.
Although Virgin Atlantic has a significantly smaller route network and marketing budget than BA, the genius behind its advertising and branding has been to position the airline as a comparable rival to BA for both business and leisure travellers.
The early days of Upper Class
Here’s an early TV ad for Upper Class from 1985.
You can see distinctive features it still offers today, an Upper Class bar and complimentary car transfers and as well as a now defunct Upper Class lounge area. Virgin also used to offer free economy tickets to entice business travellers.
“BA Don’t Give A Shiatsu”
BA has always been a target in Virgin’s advertising.
Some times indirectly. Some times very directly, as indicated by the above advert. An extremely simple, but highly effective, execution from the early 1990s illustrating Virgin’s complimentary on board massage service. A simple statement of fact that is of course left open to wider intepretation. The onboard massage service was removed around ten years ago.
Virgin Atlantic is to launch a new route from London Heathrow to São Paulo.
Virgin Atlantic will fly to São Paulo Guarulhos international airport from an as yet unspecified date in 2020. The route will be operated with a Boeing 787-9 Dreamliner. Virgin has yet to publish a schedule. However, it’s a reasonable assumption flights will leave Heathrow late in the evening to arrive in São Paulo in the early morning.
São Paulo may at first seem daunting for the visitor. It is certainly a very sharp contrast to the beaches of Rio de Janeiro and it is a destination where you do need to some homework in advance. However, São Paulo does have excellent night life, art galleries and public parks such as Ibirapuera Park. Locals are also extremely welcoming and helpful to visitors.
One of the biggest issues is traffic congestion and you do need to allow a generous amount of time when travelling to the airport. If you are also taking domestic flights in Brazil you want to fly to/from Congonhas-São Paulo airport which is much more conveniently located.
Given Virgin’s focus on North America in recent years, it is encouraging to see more non-North American routes. Virgin Atlantic’s 49% shareholder Delta owns a stake in Brazilian airline GOL which may have been one of the factors behind the decision.
Virgin Atlantic will be competing head to head against BA and LATAM, who are due to launch a new joint-venture with Iberia covering Europe – Latin America, subject to an appeal in Chile.
Air France-KLM and Virgin Atlantic have started to roll out reciprocal codeshares on each other’s transatlantic networks.
The two airline groups are currently awaiting regulatory approval to combine their respective transatlantic joint-ventures with Delta into one.
Ahead of regulatory approval, Virgin Atlantic is now offering transatlantic flights on its website from UK airports via Air France-KLM hubs in Amsterdam and Paris Charles de Gaulle.
This is potentially useful when wanting to fly to Canada, which Virgin Atlantic does not serve, and wanting to avoid transiting in a US airport. It also provides for substantially more options for Virgin Atlantic passengers flying from UK regional airports, where Air France and KLM coverage is extensive.
As these have only just launched it may take a few days before codeshares are fully rolled out and all route and fare class options are available. At the time of writing the Air France website is offering Virgin Atlantic flights from London, but KLM is not.
Members of the Virgin Atlantic Flying Club can also earn miles and tier points when flying on Air France and KLM flights that are sold under Virgin Atlantic flight numbers, as per guidance from Virgin Atlantic.
Virgin Atlantic is to launch a new route from London Heathrow to Tel Aviv from Monday 25 September 2019.
Flights will operate daily and the route will be operated with an Airbus A330 aircraft.
It is relatively rare for Virgin to launch a route to a destination outside the US. Indeed, many non-US routes have been suspended in recent years in favour of increased flights to the US. Tel Aviv is also a destination already well served from London by BA, easyJet and El Al. However, this route is likely to have been chosen to pick up feeder traffic to Delta and Virgin flights to the US.
When Air France-KLM and Virgin combine their respective transatlantic joint-ventures with Delta, it will also benefit from joint-marketing by Air France and KLM.
Virgin Atlantic has not yet officially confirmed the schedule, but local media report an afternoon departure from London Heathrow and an early morning departure from Tel Aviv, subject to seasonal changes.
London Heathrow – Tel Aviv
Flight VS453 Depart London Heathrow 13:30 – Arrive Tel Aviv 20:35
Flight VS454 Depart Tel Aviv 07:15 – Arrive London Heathrow 11:10
From Sunday 27 October 2019:
Flight VS453 Depart London Heathrow 16:00 – Arrive Tel Aviv 23:05
Flight VS454 Depart Tel Aviv 06:05 – Arrive London Heathrow 09:55
A consortium including Virgin Atlantic has made an offer to buy the airline Flybe.
Flybe announced last year that it had put itself up for sale and Virgin Atlantic had made known its interest in the airline.
The consortium also includes Stobart Aviation, which operates flights under the Flybe franchise, and Cyrus Capital Partners. Stobart Group had launched an unsuccessful takeover bid for Flybe last year.
Cyrus Capital will be the single largest shareholder, owning 40% of the consortium. Stobart Aviation and Virgin Atlantic will each own 30% of the consortium.
The transaction is subject to approval by Flybe’s shareholders. In theory, another bid could be forthcoming. However, this is unlikely. Any bid by International Airlines Group would require competition remedies at London Heathrow and BA seems happy with the performance of BA CityFlyer at London City.
This bid offers little to Flybe’s shareholders. On its first day on the stock exchange in December 2010, Flybe’s share price closed at 341¼p, valuing the airline at £249m. Yesterday, Flybe shares closed at 16.4p, valuing the airline at £36m. This offer is for substantially less, at 1p a share, valuing the airline at £2.2m. However, it does provide for a relatively dignified and orderly exit.
As part of the transaction the consortium will also acquire Stobart Air. The combined Flybe and Stobart Air operation will operate under the Virgin Atlantic brand. However, it will remain an independent airline from Virgin Atlantic. Operating under the Virgin brand is not without risk if there are issues with reliability and punctuality.
The consortium has also agreed to provide a £20m bridge loan to support Flybe’s operations pending the acquisition and to invest £80m of further funding after the acquisition.
Stobart Air does provide wet leased aircraft to other airlines, including rivals of Virgin Atlantic, and this will continue to operate.
Whilst the offer document makes much of the ability to feed Virgin Atlantic at London Heathrow and Manchester, and grow short-haul flights at London Southend, it says much less about operations at other UK regional airports which are heavily dependent on Flybe for traffic. Flybe is by some margin the single largest airline at many UK regional airports, including Exeter and Southampton. Continue reading “Virgin Atlantic Consortium Bids To Buy Flybe”
As Virgin Atlantic approaches its 35th year, it remains a very strong brand in the UK. However, profitability in recent years has proved elusive.
The airline reported a loss for 2017. Next year, there will be a number of significant changes to improve its financial performance. Here’s a quick run through of what to expect.
Air France-KLM & Delta
Virgin and its 49% shareholder Delta are in the process of securing regulatory approval to combine their transatlantic joint-venture with that of Delta and Air France-KLM.
The primarily intention is to make the combined joint-venture much more competitive against American Airlines and BA.
This is particularly because Air France and KLM can offer many destinations in Asia and Africa not served by Virgin (or indeed BA). KLM in particular also has extensive coverage of UK regional airports and can offer many connection opportunities not offered by Virgin (or again BA in some cases).
This is likely to lead to extensive reciprocal codesharing between Virgin Atlantic and Air France and KLM. Virgin may also pursue greater co-operation with Air France and KLM on non-transatlantic routes. Subject to space, Air France and KLM may also co-locate with Virgin Atlantic in Terminal 3 at London Heathrow.
As part of this, Sir Richard Branson’s Virgin Group will cede control of the airline, by selling a 31% stake to Air France-KLM. This will leave Delta as the single largest shareholder.
Sir Richard Branson has long had little involvement in the day-to-day running of the airline. However, this is symbolic as Virgin Atlantic has been the one business he has previously resisted ceding control of.
Separate to these changes, Virgin’s CEO Craig Kreeger will retire on 1 January and be replaced by an internal appointment, Shai Weiss. Shai is currently Chief Commercial Officer and and has been with the airline since July 2014.
A rare moment of good news for passengers facing uncertainty over the Christmas travel period.
Virgin Atlantic has successfully obtained an injunction at the High Court to prevent a series of strikes by pilots represented by the Professional Pilots Union.
The Professional Pilots Union represents approximately 30% of Virgin Atlantic pilots.
The first strike was due to take place from Saturday 22 December to Tuesday 25 December 2018. Further strikes were planned for Sunday 30 December to Wednesday 2 January and Friday 4 January to Monday 7 January 2019.
On the basis that Virgin has obtained an injunction based on the manner on which the union conducted the ballot, it is assumed that no further strikes will go ahead under the current ballot mandate.