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Virgin Atlantic is today widely reported as setting expectations for an operating profit in 2024 of more than £200m, up from £80m this year. After financing costs, it will return to profit in 2024.
Perhaps more interesting to HfPers is the reason for the turnaround. “We are seeing very robust demand for premium leisure travel”, especially to the Caribbean, Madives and Dubai, and inbound to the UK by US residents. India has “near infinite” demand, so services to Mumbai will double. Other soundbites: passengers are willing to pay “robust” fares; and Virgin sees “continued demand” from UK travellers in premium seats.
What does this mean for UK-based frequent fliers? I suggest it means that we will see no immediate softening of prices in business or premium economy, and hefty surcharges on redemptions are here to stay.
Any other thoughts?
That Rob was right not to transfer his Virgin points out to a Hilton during Covid?
Well, after deducting interest charges, Virgin Atlantic made a loss of £139 million in 2023. (Note that it’s 2023, as we are only part way through 2024).
The owners say that they are optimistic – but they have a huge debt burden. Not a great business model.Well, after deducting interest charges, Virgin Atlantic made a loss of £139 million in 2023. (Note that it’s 2023, as we are only part way through 2024).
The owners say that they are optimistic – but they have a huge debt burden. Not a great business model.Shai can talk a bullish story, for sure. I think Virgin has only made a profit in two of the last ten years and that small profit was dwarfed by the losses even before covid hit and, as you say, debt still stands around £3bn so it’s not all exactly a bed of roses.
VS is just one of the many ships enjoying the rising tide, partly through good demand but perhaps just as importantly by the externally forced temporary capacity constraints owing to a shortage of aircraft across the industry.
VS is just one of the many ships enjoying the rising tide, partly through good demand but perhaps just as importantly by the externally forced temporary capacity constraints owing to a shortage of aircraft across the industry.
This is fascinating reading, https://flightplan.forecastinternational.com/2024/01/15/airbus-and-boeing-report-december-and-full-year-2023-commercial-aircraft-orders-and-deliveries/
TLDR: As of Dec 2023 Airbus has a backlog of 8598 and Boeing 6216 (that was obviously before their recent issues stopped them shipping finished product) and both manufacturers are getting approx 2.5 new orders for every aircraft they build.
…Virgin has only made a profit in two of the last ten years and that small profit was dwarfed by the losses even before covid hit and, as you say, debt still stands around £3bn so it’s not all exactly a bed of roses…
Quite. I hadn’t for a moment intended to infer that I believed VA to be a magic money tree.
But I find the resilience of the premium leisure traveller interesting given the well-documented travails afflicting luxury ecommerce (Matches, Net-a-Porter, Farfetch, etc) and luxury car makers (eg Bentley sales down 11% last year). A smart uptick in the price elasticity of demand for premium travel would help us all to snag some bargains – in the short term, that is, before the industry collapses, but, as has often been said, in the long term we’re all dead.
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