Business travellers help to boost Virgin Atlantic

Aug 27 2008 by Peter McCusker, The Journal

ASURGE in business passengers helped Sir Richard Branson’s airline Virgin Atlantic to increase profits in 2007/08.

Profits have also soared in the first part of 2008/09, with Virgin partly attributing the increase to passengers switching from British Airways to avoid the initial problems at Heathrow’s Terminal 5. Virgin reported that its pre-tax profits for the period March 2007 to February 2008 had risen £6m to £34.8m.

Excluding exceptional items, the 2007/08 pre-tax profit rose 38% to £60.9m.

Virgin said its business-class passenger numbers rose 22% in 2007/08 and group sales, including tour operator Virgin Holidays, rose 9.1% to nearly £2.37bn. The total number of passengers carried during the year increased by 7.6% to 5.7 million.

In the period March to May 2008, pre-tax profits rose to £23.5m, with sales up 16% to £645.3m.

Virgin said it had “gained passengers from British Airways” because of the problems that hit the £4.3bn new Terminal 5 at Heathrow. The terminal had a shambolic opening in March this year, with flights cancelled, luggage going astray and huge queues.

A spokesman for British Airways said: “We do not recognise Virgin’s claims to be taking business from us on the grounds that passengers do not like Terminal 5 (T5).

“Passenger numbers in T5 are now 65,000 a day, having risen steadily from 40,000 a day in April. Passengers are extremely happy with T5, which is working well and provides an experience vastly superior to the rest of Heathrow.”

Virgin has been vociferous in its opposition to the proposed link-up between BA and giant US carrier American Airlines (AA). Sir Richard, the Virgin president, said yesterday: “Our results prove that consumers want choice on transatlantic routes. Unless the regulators block the proposed BA/AA monopoly, consumers will lose out – and they’ll pay higher ticket prices for the privilege.”