Virgin Atlantic facing record loss

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This topic contains 41 replies, has 16 voices, and was last updated by  AnastasiaBeaverhouzen 12 Mar 2013
at 09:31
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Viewing 15 posts - 1 through 15 (of 42 total)

  • Anonymous

    rferguson
    Participant

    Reported in the Sunday Times today, VS facing a record loss of £135M. Not a huge sum in airline terms I guess, but for a relatively small carrier it must be unsustainable.

    The new CEO has initiated wide ranging cost cuts and a pay freeze.

    Why would the loss be so big? Could these be one off costs for the purchase of new aircraft? Or are some of VS’s routes hugely loss making? I know fuel is an issue but…..

    I wonder if we will see Virgin downsize a bit of pull out of certain routes because of this.

    A shame, Virgin has always kept BA on it’s toes and given the UK consumer a choice when flying long haul. Hopefully it will continue to grow instead of shrink!

    http://www.thesundaytimes.co.uk/sto/business/Industry/article1227450.ece


    FormerlyDoS
    Participant

    I wonder if the loss of bmi and the pax it fed to VS played a part?


    rferguson
    Participant

    Could be right FDOS, didn’t think of that!

    If it is the case I guess the launch of ‘Little Red’ should help.


    Bucksnet
    Participant

    Their yield must be terrible, which is not surprising considering some of the reviews they’re getting.

    They need to improve their offering across the board to drive increases in revenue.


    SimonS1
    Participant

    I’ve always thought VS is in no mans land really. It doesn’t really have the breadth of routes to be a serious competitor to BA on long haul (other than in a few areas), doesn’t have the slots to compete on short haul, cost base too high to compete with the lo-co/point to point operators etc.

    I was surprised when they pulled out of Nairobi bearing in mind Africa is growing fast.

    Shame as they were quite innovative when they started but a friend who travelled recently said their planes (ex LGW) are getting tatty and Branson’s stunts like running on chip fat, starting grids, 4 engine 4 long haul etc seem to have lost their momentum…..


    BigDog.
    Participant

    FDOS is correct. The loss of the through ticket feeder traffic from BMI had a huge impact on Virgin.

    RFerguson – read the little red thread, twice I posted the need to replace the lost feed quickly was the priority for Virgin though you/VK sought to focus on the lack of glitz.


    rferguson
    Participant

    You are totally right BigDog.

    This latest news gives me a whole new view towards Little Red. I didn’t know the lack of BD feed would effect VS so much. Or that they have such little to spend on ‘glamming up’ their new domestic service.


    NIRscot
    Participant

    DXB is rumoured to be for the chop.


    rferguson
    Participant

    I guess that would make sense NIRscot. QF will soon also be competing on the LHR-DXB route with the incumbent airlines. As well as Emirates soon to launch their 58th daily A380 LHR-DXB flight (yes exaggerating) 🙂


    LondonCity
    Participant

    I reckon SIA must be glad it divested itself of its VS shareholding when it did.

    I wonder if VS will ever take delivery of the 6 x A380s in has on order ?

    In this interview on flightglobal.com last year, former CEO seems to be hedging his bets:

    http://www.flightglobal.com/news/articles/virgins-a380-order-depends-on-economy-and-oil-price-ridgway-378103/


    rferguson
    Participant

    I was thinking the same about the A380’s LondonCity.

    I guess the 787’s will be much appreciated (if they ever get airborne again) as VS will then be able to get rid of some of the expensive gas guzzlers.


    MarcusUK
    Participant

    My experiences in 2011-2012, were terrible overall on VS, sadly.
    I let the gold card go and moved those flights i did with them to another Airline.

    They have been 49% bought by Delta.
    This means it highly likely it will join Skyteam. The sooner it does this the better. Then they would have a better feeder base from AF/KLM.

    They have recently moved to more tourist flights holiday sales etc, many new A330’s not having Upper Class. The Lounge is the best feature of flying VS, The peripheral services around such as the credit cards, shopping earning miles, etc, simply a waste of time chasing miles and getting decent service.

    In my view, all these Airlines thinking new travellers will come their way, are simply foolish. All they do at the moment, is try to get other customers from other Airlines. Emirates are typical of this. Therefore, many Airlines will not or are not, surviving.
    Unless part of a big group, Virgin will continue on this path…


    SimonS1
    Participant

    Well EK made profits of almost $600m in the first 6 months of their year, so they must be doing quite well at getting customers from other airlines…..


    LeTigre
    Participant

    Thought I might add some info that is useful in context:

    -I believe about a third or more of the loss is attributable to cargo, which has fallen off a cliff
    -Vhols is profitable
    -Most of this loss was incurred last spring and summer, when both business and leisure traffic was subdued during downturns and Olympics
    -The loss of bmi has taken away lots of feed at Heathrow (10% of VS pax at Heathrow?)
    -The VS-VS connection strategy is proving very successful, with around 10% of pax connecting (though not sure if this includes other airlines), a huge increase, further increases are expected
    -The winter season surpassed expectations, the losses could have been far worse
    -The A333s are performing well, and the demand for upper class at Gatwick is strong, all A333s will be in a Heathrow config by about October
    -Little Red is budgeted to be loss making, and cause it is a wet lease, the costs won’t spiral, but will restore some of the lost feed (up to 1.5 million pax, some calculations suggest half will connect)
    -An announcement on skyteam is likely this year

    Hope this is interesting for you!

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