The contrasting fortunes of Virgin and BA

Steve Ridgway (below) was not exactly effervescent on the radio this morning, talking about the fact that Virgin Atlantic had made a profit of £68 million in its last financial year, but he was clearly seriously chuffed about his airline’s performance in such tough times, and his company’s management foresight.

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His mood was in sharp contrast to that a week ago when a doleful Willie Walsh, the chief executive of British Airways, talked of record losses.

A lot of Virgin’s achievement is down to being conservative, which says something good about a brand that prides itself on bringing the fun back into flying, but clearly not at the expense of running a tight ship.

That conservatism meant it was beginning to trim back capacity and defer new aircraft deliveries long ago. It also meant it had a good fuel and currency hedging programme in place, meaning it did not get stung amid the extremely volatile fuel prices of the past year.

Contrast too Virgin’s fortunes with those of that other UK based carrier bmi, which reported horrible losses recently and whose majority shareholder Sir Michael Bishop is in a wrangle with Lufthansa over the German carrier’s plan to buy him out.

I wonder what the situation in the UK airline market will look like in a year. Today we have a seemingly healthy Virgin Atlantic, a stuttering BA and a chronically injured bmi.

Surely those who eventually see some kind of pairing of Virgin and bmi have been given greater fuel for their vision today.

Here is the analysis Victoria Moores wrote about the future of bmi in Airline Business.



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One Response to The contrasting fortunes of Virgin and BA

  1. Henk 29 May, 2009 at 2:04 pm #

    Yes – but what Ridgeway didn’t mention is that Virgin Atlantic is a private company, and reports financial results according to UK GAAP rather than IFRS standards. Apparently, Singapore Airlines reported that Virgin Atlantic (in which it is a major shareholder) was mostly responsible for the loss it had to book on its shareholdings. This was reported in ATI, but I’m surprised no one took this up.

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