Virgin Atlantic is bracing for a loss this year, owing to the weakness of the pound after last June’s referendum. Craig Kreeger, the chief executive of the airline said 2017 is not likely to be as good as last year, which saw Virgin Atlantic register a £23m pre-tax profit, a £500,000 rise from the previous year.
He said: "Our expectation for 2017 is to be loss making. We are busy working to try and make that not the case," adding that the sterling’s weakness had reduced sales and increased costs.
"What we are seeing is leisure demand down as it's more expensive for Brits to go abroad. And our costs are up as both fuel and airplanes are paid for in dollars," he added.
Virgin, founded by British billionaire Richard Branson and partly owned by U.S. partner Delta Air Lines Inc, increased capacity on trans-Atlantic routes last year, which contributed to a 4.3% slump in revenue. Kreeger is however optimistic that he is still on course to honour his pledge to match the airline’s best ever profit, 1999’s - £99m- by 2018. "We were very much on track for it prior to June 23
"It's definitely possible [we might make that target] but not based on current forecasts."
Virgin has had worse days in business, a good case in point being the £300m of losses recorded in the five years to the end of 2013, but since then, it has been profitable. The airline is now looking into focusing on cost saving as well as marketing the UK as a destination for inbound flights. This is hoped to reduce the impacts of a weaker pound.
Kreeger hopes to make more sales efforts in the US, China, Hong Kong and South Africa, in a bid to salvage the situation.
He was speaking on board Virgin Atlantic’s inaugural flight to Seattle, the airline’s newest destination. He pointed out that it wasn’t all gloom for the airline as Virgin is only a year away from completing a three year £300m investment programme, designed to upgrade its technology and operations. Plans are also underway to upgrade its fleet, having acquired four Boeing 787-9’s last year, and ordered for 12 Airbus A350-100.