Tuesday May 26, 10:05 AM
Virgin Atlantic says annual profits almost double
LONDON (AFP) - British airline Virgin Atlantic said Tuesday that profits almost doubled in 2008/09, in contrast to a large annual loss at rival British Airways (LSE: BAY.L - news) , despite choppy oil prices and a fierce recession.
Pre-tax profits rocketed by 96.5 percent to 68.4 million pounds (78 million euros, 108 million dollars) in the 12 months to the end of February, compared with 34.8 million pounds in its 2007/08 financial year.
Group sales, including tour operator division Virgin Holidays, increased by 8.4 percent to 2.579 billion pounds.
Virgin said in a results statement that it was boosted by rising demand for premium travel and its policy to "hedge" against volatile oil prices.
Airlines seek to protect themselves against dramatic oil price movements by hedging -- or taking a defensive position on futures markets. Jet fuel, or kerosene, is refined from crude oil.
"The strong results... reflect an increase in the number of premium travellers choosing the airline, as well as prudent management decisions taken during the most volatile trading conditions in the airline's 25-year history -- where oil prices peaked at 147 dollars per barrel and subsequently dipped as low as 38 dollars," Virgin said in a statement.
World oil prices had soared to record high points above 147 dollars in July 2008 but have since slumped in line with weak energy demand arising from the sharp global economic downturn.
Virgin added Tuesday that it carried 5.8 million passengers in the past year, despite a deep recession in home market Britain.
Virgin Atlantic, which is not listed on the stock market, is 51-percent owned by tycoon Richard Branson. Singapore Airlines (C6L.SI - news) owns the remaining 49 percent.
The group spent nearly 1.0 billion pounds in fuel costs in 2008/09 but it was helped by "hedging" its position on oil.
On Friday, BA had posted a pre-tax loss of 401 million pounds for 2008/09 and blamed high fuel costs and slumping demand.
Virgin Atlantic, which celebrates its 25th birthday next month, has a fleet of 38 planes and about 8,500 staff.
"The last financial year has proven to be the most volatile yet in our 25-year history," said Branson in the earnings release.
"To increase profits against a backdrop of such a severe recession is an excellent achievement by all of our staff."
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