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Virgin Atlantic doubled its profits last year but chief executive Steve Ridgway warned today that it would be unlikely to perform anywhere near as well in the current year.
"There's not an airline in the world that's going to make money this year," he said. "These are the toughest conditions I have ever seen in the industry."
Just days after his arch-rival British Airways announced losses of £401million, Virgin chairman Sir Richard Branson said that Virgin Atlantic's profits had risen from £34.8 million to £68.4million.
"The last financial year has proven to be the most volatile yet in our 25-year history," said Branson. "To increase profits against a backdrop of such a severe recession is an excellent achievement by all our staff."
Those staff, who have already agreed to a wage freeze this year, will share in part of Branson's success with 10% of profits paid out as bonuses in next month's pay cheque. That is equivalent to between one-and-a-half and two weeks' extra pay for most employees.
Ridgway said that it was impossible to predict an end to the current crisis facing the airline industry.
He said: "This year will remain very tough. We were hoping this would be the bottom of the grimness. But it is very, very flat at the moment. Business travel is very low."
Ridgway said that fares, particularly for business class travellers, were as low as at any time in Virgin's history. "You can get a return flight to Sydney - flying via the Gulf - for just £1400 at the moment.
"That's great news for customers if not for the airlines. We are winning market share from our competitors and our load factors remain resilient as customers take advantage of these bargain fares."
Ridgway claimed that Virgin Atlantic had taken a more cautious view of the market earlier than its rival BA.
"As a company we have traditionally grown very fast. But by the end of 2006 we realised that it was time to slow down and we deferred a large number of new aircraft in 2007 and particularly in 2008. We also concentrated on only flying routes which were mature."
He said the firm had also been successful in its decision to hedge fuel prices and currencies in the last year. Ridgway said: "We had a very good first half and managed to keep traffic levels up right through until November whereas BA's numbers were already dropping off in July. But now we are cutting capacity on routes like New York, Washington and the Far East.
"We have taken out 7% of capacity so far and there's another 5% to come which I think is more than BA."
Virgin Atlantic - which includes the holiday company as well as the airline - saw its revenues rise by 8% to £2.38billion in the year to February as it carried a total of 5.77 million passengers.
Ridgway has still not ruled out Virgin's eventually coming together with bmi, the UK airline currently being taken over by Germany's Lufthansa.
Reader views (4)
Perhaps this is the reason why it is going to cost me nearly 3,000 GBP (400,000 JPY) to fly home economy for Christmas!
- James, Tokyo, Japan
Virgin has maintained its service. BA has reduced the quality of its services dramatically over the last few years they have become the Ryanair of the world, with bad personnel and bad airport staff. That is why passengers are deserting BA in droves: the competition is just getting so much better at servicing.
- Jacqueline, Hampstead, London
As long as we dont have to suffer grinning Branson in any ad campaigns that's fine by the british public..Nice to see the Nekker Islander doing so well and avoiding more tax..
- Jonnie Of Brixton, brixton,london,england
If one airline can double its profits to £68million how on earth can another lose over £400million? Perhaps they were giving free flights to MPs?
- Mike, London England
