Update: This article contained some inaccuracies. Virgin Atlantic was said to have made "heavy losses" for the last three years, when in fact the company made a loss in only one of the last three years (2009/10). In addition it was incorrectly stated that British Airways carries 300 million passengers per year. The real figure is closer to 30 million. I apologise for these errors.
Virgin Atlantic made a loss in 2009/10 and, according to the Independent, at least has endured a lean decade as a whole. Could the uncertainty surrounding the pilots' strike cause further damage the company's finances and reputation? In 2009/10 Virgin Atlantic made a loss of £132, thanks to a decline in its business traffic - the main source of profit for transatlantic carriers.
2009 was a very bad year for most airlines. British Airways announced pre-tax losses of £401m, again thanks to a slump in the business travel combined with high fuel costs. The difference between British Airways and its rival Virgin Atlantic however is that while British Airways services around 30 million passengers a year; Virgin services just six million. While Virgin Atlantic may have gained market share during BA's mini crisis, brought on as it was by the recession, an ash cloud and cabin crew strikes, Virgin still appears quite far from supplanting BA if passenger numbers are anything to go by.
Premium passengers are a vital resource for long haul airlines. Virgin Atlantic relies on the front of the cabin for more than 50 per cent of its revenues. The financial fortunes of the airline may well be sustaining damage with every day that uncertainty concerning strikes prevails. The airline's most profitable passengers are the business travellers, who tend to book late and pay the premium prices. However, with the confusion that is surrounding the business this summer, businesses and travel agents are reportedly beginning to steer clear of Virgin Atlantic.
Richard Branson no doubt knows the damage this crisis is having on its reputation. The airline's President has got involved in this strike, after initially steering clear of the day to day running of the company for more than five years. He has offered to meet with the pilots but does not believe the deal can be bettered by his airline, or by any other for that matter. It is said to be an industry leading pay deal but the British Air Lline Pilots' Association do not believe, after two years of pay freezes, that the deal is in any way fair.
The delay in the announcing of the strike dates and the apparent lack of a resolution to the dispute is likely impacting on the business as well as on the trust passengers have with the airline. The airline has endured what has been desrcribd as a lean decade and has an ageing fleet, although it now has 10 A330s due to enter service in the next 18 months. Virgin Atlantic is up for sale or at least partial sale but as yet there have been no takers willing to rejuvenate the airline.
For more information on how the Virgin Atlantic pilots' strikes will affect you click here.
For more information on the strikes click here.