LONDON (Reuters) - Virgin Atlantic VA.UL said tough economic conditions over the last year and lower demand for business travel caused by the London Olympics dragged it to a wider annual loss.
The airline, founded by British entrepreneur Richard Branson, on Thursday reported a loss of 93 million pounds for the year to the end of February, 16 percent worse than the 80 million loss it reported a year earlier.
“Last year saw a double dip recession, a continued weak macro economy, and an Olympic Games which, although a fantastic event, severely dented demand for business travel,” said chief executive Craig Kreeger, who joined Virgin earlier this year from American Airlines (AAMRQ.PK).
European carriers such as IAG’s (ICAG.L) Iberia, Lufthansa (LHAG.DE) and Air France-KLM (AIRF.PA) are slashing jobs and shelving growth plans as they grapple with high fuel prices, a weak economy and fierce competition from low-cost carriers and Middle East airlines.
Kreeger said he was confident the airline’s financial performance would improve “considerably” in 2013/14 and that it would return to profit in the second quarter of 2015.
Late last year U.S. carrier Delta Air Lines (DAL.N) bought a 49 percent stake in Virgin Atlantic, creating a joint venture that the pair said would generate new revenue and leverage Virgin’s strong luxury brand.
Branson retained his 51 percent stake in Virgin Atlantic and ownership of the brand of the airline he founded in 1984.
Revenue increased by 5 percent to 2.87 billion pounds as 5.5 million passengers flew with the airline, 188,000 higher than last year.
At a group level, Virgin Atlantic’s pretax loss was 69.9 million pounds after a one-off positive 35.4 million pounds exceptional item and 23.1 million pounds in other income was taken into account, it said.
Virgin Atlantic, which launched its Little Red domestic service last month, has suffered in recent years from soaring fuel costs and increased competition as well as the global economic downturn. It last reported an annual profit for the 2010/11 fiscal year.
Rival International Airlines Group (ICAG.L), owner of British Airways and Iberia, last week reported an operating loss of 278 million euros ($364 million) in the first three months of 2013.
Reporting by Rhys Jones; editing by Neil Maidment and Brenda Goh