Virgin Atlantic is reportedly to announce a record annual loss of GBP135 million for 2012, according to a report by The Sunday Times. Virgin Atlantic CEO Craig Kreeger reportedly said the airline’s financial performance is “well behind where we anticipated” and reportedly has imposed an immediate salary freeze across the whole airline. Mr Kreeger has also launch a cost reduction plan.
Virgin Atlantic reportedly to announce record annual loss: report
You may also be interested in the following articles...
China-UK air service agreement permits growth as Chinese airlines constrained in most other markets
An agreement between China and the UK to more than double their air service agreement is good timing for both sides. Chinese airlines are finding an imbalance: they are taking delivery of widebody aircraft and more Chinese airlines are flying long haul but traffic rights to major markets – the US, Canada, Germany and France – are becoming depleted. Negotiations to add traffic rights have not succeeded, typically due to the foreign side being concerned about accessing Chinese slots or Russian overflight rights.
The agreement with the UK to expand the number of weekly passenger flights from each side from 40 to 100 reflects considerable pragmatism on the part of the UK: British Airways and Virgin Atlantic are not growing in China, and China is a large growth opportunity. The UK has lagged on Chinese tourism. It was only in 2015 that China became the UK's largest inbound market.
Vueling NEXT Part 2: new CEO to lead IAG's LCC in restructuring bid to achieve IAG targets
Vueling's new CEO, Javier Sanchez-Prieto, is leading a programme ('Vueling NEXT') to improve its profitability, both through revenue enhancement and cost efficiency gains. Among other aims this hopes to reduce Vueling's high levels of seasonality, to raise aircraft utilisation and to improve labour productivity. Given ambitious financial targets by IAG – action is needed.
Part 1 of CAPA's analysis of Vueling examined its capacity growth and profitability trends since its acquisition by IAG in 2013. Vueling's operating margin and return on invested capital are on a downward trend, hence the new initiative to reverse these trends.
This second part of CAPA's analysis considers the profit improvement programme. During this programme Vueling's fleet will remain broadly flat to 2018, before resuming growth thereafter. Focus markets for Vueling are domestic Spain and Spain-Europe. It has strengths in these markets but faces growing competition from its lower-cost rival Ryanair, which has also been raising its service quality – closing the gap to Vueling's more premium positioning on the LCC spectrum.