The boss of Virgin Atlantic has urged new UK Prime Minister Liz Truss to not be afraid to make difficult decisions to reverse the devaluation of the pound.
Shai Weiss, the carrier’s chief executive, was speaking as the UK carrier announced that it is joining SkyTeam, the first new member of the airlines’ alliance for eight years.
He acknowledged that Truss has taken difficult decisions on becoming PM, but said she “maybe needs to take more difficult decisions in order to reverse the decline of the pound”.
This week, amid fears that the UK is already in recession, the pound slumped to record lows against the US Dollar and the Euro after planned tax cuts and increased borrowing was announced in a ‘mini-budget’ by new Chancellor Kwasi Kwarteng.
Weiss said although Virgin’s financial position was strong having taken precautions against a devalued pound and rising fuel prices, there are concerns about the fundamentals of the economy.
“We are concerned, like everyone else in the country about the economic environment in which we are operating right now,” he said.
“The weakness of the pound is hurting the economy and it’s hurting consumers and it’s fuelling the inflationary viscous cycle we are in.
“We buy planes and fuel in dollars. Thankfully, we took some very smart financial positions that will ease the impact of the devalued pound in the next few months. But we do hope to see it strengthen again.”
Weiss said the planned cap on energy bills, along with the tax cuts announced last week, could go some way to protecting budgets for travel and holidays.
But he added: “All of us should be humble enough to say if I’m doing something that’s not working maybe I should reverse course. That’s a big debate for our politicians and, of course, for our government.”
The financial positions on currency Virgin was able to take a couple of months “will allow us to benefit should the pound get to parity”, Weiss said. “It’s worth a considerable amount of money and I wish we would have done more.”
The Virgin Atlantic boss said the aviation sector has been resilient despite the impact of Brexit and the Covid pandemic and, after good summer, trading for the year to Christmas looks healthy.
He said the airline’s unit revenues were up 27%, while coupon values were up 28% and booking volumes were tracking towards an 85% load factor in the fourth quarter of 2022.
“That’s not to say a recessionary environment will not have an impact, but it’s more of an adjustment downward,” he said.
Transatlantic capacity is “very disciplined”, said Weiss and, with some carriers not surviving the Covid impact, the emphasis is on “providing value to our customers”.
He added the flip side of the devalued pound is that the UK is “on sale” for people who want to come to visit the new king at a fraction of the cost.