Virgin Atlantic is projecting a return to the black in 2023 after the pandemic threatened its survival.
Losses are expected to be narrowed “significantly” again this year as passenger demand and international travel returns at scale.
“The Delta and Omicron variants and continued travel restrictions meant that ramp up was delayed and demand curtailed such that the airline now expects to return to profitability in 2023,” the carrier said.
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Reporting 2021 financial results, Virgin Atlantic that losses had been reduced by £378 million to £486 million over the previous year.
“The results reflect an intensely challenging year for Virgin Atlantic in 2021 and the continuation of the immense challenges the airline industry faced due to the Covid-19 pandemic,” the airline said.
Revenue rose by £60 million over 2020 to £928 million but was down from £2.9 billion achieved in pre-pandemic 2019. This resulted in an ebitda loss of £166 million and a pre-tax loss of £594 million before exceptional items.
Chief executive Shai Weiss described 2022 as a year of transition, “from survival to recovery and on to profitability by 2023”.
The airline raised £670 million in new capital in the 12 months to the end of December, with a “robust” cash position of £580 million.
The cash injection included a £400 million shareholder investment completed in December; maintaining £300 million in annual cost savings; capitalising on pent up demand following the opening of the transatlantic corridor; and delivering record cargo revenue of £448 million, accord to the results filing.
“These actions narrowed statutory losses by £378 million verses 2020 to £486 million in 2021, and helped to set the airline up for success in 2022,” Virgin Atlantic reported.
Passenger capacity increased by 9% over 2020 but passenger numbers remained flat.
“Both remain below pre-pandemic levels at 29% and 27% of 2019 respectively, reflecting the impact of international travel restrictions being in place throughout the majority of 2021,” the airline said.
Passenger revenue of £410 million was just 20% of 2019 levels and continued to be “severely impacted” by the pandemic.
The relaxation of travel restrictions in the last three months of the year resulted in passenger revenue for the fourth quarter growing to 42% of 2019 levels.
The airline was able to bring back more than 1,100 crew and pilots from holding pools created as part of the 2020 response to the pandemic as it ramped up operations in the final quarter of the year.
The company’s cargo arm delivered annual record revenue of £448 million, a rise of 200% over 2019 and 40% over 2020. The cargo division “continued to play a vital role in ensuring Personal Protective Equipment and testing kits were transported from China into the UK, as well as sending oxygen concentrators to India”.
The airline has introduced a four-year plan named ‘Velocity’ in 2022 to support a mission to become “the most loved travel company and sustainably profitable”.
Weiss said: “2021 started with hopes for recovery, following the successful £1.2 billion solvent recapitalisation of the airline in September 2020, underpinned by more than £300 million annual structural cost savings fully delivered.
“However, with ongoing restrictions and the rapid spread of the Delta and Omicron variants, customer demand was materially impacted and the year became even more challenging than previous, despite the vaccine rollout.
“Persistent volatility in international travel, fuelled by ever changing restrictions and testing requirements, resulted in significant losses and a decline in passenger numbers, with an improvement in November as our heartland destinations in the US opened up to UK travellers, following months of cross-industry campaigning to open the skies.”
He added: “The completion of £400 million shareholder investment in December 2021 sets us up for success in 2022, as we take advantage of the return of customer demand.
“We have much to look forward to, from the launch of a new route to Austin, Texas in May – our first new US route in five years – to the introduction of the A330-900 in the autumn, continuing the transformation of our fleet into the youngest and cleanest in the sky.
“While we have learned we can’t predict the future and there will be significant challenges ahead, the outlook is full of promise. This will be the year we get back to our very best for our people and our customers.”
Chief financial officer Oli Byers said: “Our 2021 financial results reflect the continued challenges faced by our industry due to the Covid-19 pandemic – aviation was one of the first industries to be affected and remains one of the last to fully recover.
“During 2021 we successfully raised over £670 million of new capital and ended 2021 with a robust cash position of £580 million.
“2022 will be a year of transition as we move from survival into recovery and capitalise on the return of customer demand.
“We have cause for optimism balanced with macro-economic and political uncertainty, alongside the residual risks of the pandemic.
“We anticipate a return to profitability in 2023, driven by a recovery in air travel demand and more than £300 million annual cost savings, already delivered.
“With the unwavering commitment and belief of our people, our customers, our partners and our shareholders, together we have ensured that Virgin Atlantic is emerging from the pandemic in a strengthened financial position and continues to play a vital role in the recovery of UK economy, proudly flying and reuniting families, friends and colleagues around the globe for decades to come.”
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