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Strong year for cargo, but Virgin Atlantic still records first loss in four years

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20/03/2018

Cargo volumes may have hit a five-year high, but Virgin Atlantic has recorded its first loss in four years. Chief executive Craig Kreeger predicted last year that the carrier would struggle for profit as sterling depreciated against the dollar, and he stuck to that line when reporting the GBP28.4m pre-tax loss. Reports also have him citing an industry-wide problem in accessing Rolls-Royce engine parts for VA’s Boeing 787 fleet and other challenges resulting from hurricane disruption across the Americas.

Despite the weakness reported by the carrier overall, the cargo division managed to ride the e-commerce – and to a lesser extent, pharma – wave that boosted the air freight market last year. Virgin Atlantic Cargo MD Dominic Kennedy said that, while the market was undoubtedly buoyant, there remained “strong competition” for business. “We are delighted with the results we have delivered for the airline, which are a tribute to the outstanding performance of our entire cargo team,” said Mr Kennedy.

“With our prime route network, growing capabilities for specialist products and continued passion for high-quality service, we are well placed to meet sustained demand from our customers.” Cargo revenue was up 9% year on year at GBP199.6m on the back of 230.5m kg in volumes (up 6%) – the carrier citing “strong” westbound business, particularly on its new Heathrow-Seattle route. Africa and India services also saw “strong” volume gains, as did UK-China and UK-US routes, despite exchange rate pressure.

The improvement in its African ventures supported Virgin Atlantic’s decision last week to announce a second daily service between Heathrow and Johannesburg for the end of October. Director of sales Steve Buckerfield said: “Virgin has been serving the Johannesburg market for 22 years and we continue to receive outstanding customer support.

Strong year for cargo, but Virgin Atlantic still records first loss in four years

“2017 was a particularly strong year for both north and southbound cargo volumes, so the addition of a second daily frequency is great news for us and our customers.” The carrier saw Johannesburg export volumes up 4% year on year, with the wider South African market growing 5%.

The new route will be served by a B787-9 with 24-tonnes of capacity. To handle the city’s growing customer base, the carrier said it would open a local contact centre. Regional sales manager Johannesburg Laurn Baldwin said he was confident: “News of this additional capacity could not be coming at a better time and reinforces our commitment to the South African market.”

He added: “Our decision is also based on having listened to the requirements of our customers, who value the presence of a local team. I am confident these positive developments, alongside our commitment to providing great customer service, will help us deliver another fantastic year for cargo.” Meanwhile, Air France-KLM’s plans to buy a 31% stake in the UK carrier, announced in July last year, appear to be nearing completion, requiring just regulatory approval.

The purchase would see the Franco-Dutch carrier become the second biggest shareholder after Delta, which has a 49% stake.

Sir Richard Branson, who founded the airline, will retain a 20% stake and remain as chairman,

References

  1. ^ (theloadstar.co.uk)



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