Fixes in place to restore Virgin Atlantic’s profitability: Kreeger

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Virgin Atlantic chief executive Craig Kreeger is confident he can reverse the airline's losses within two years with help from its fleet renewal programme and tie-up with Delta Air Lines.

Speaking to Flightglobal Pro sister magazine Airline Business, Kreeger - who was appointed in February - expressed confidence in his ability to turn around Virgin. He says the airline has been disproportionately affected by several issues that have caused its financial woes over the last five years.

Virgin Atlantic reported a pre-tax loss of £69.9 million ($107 million) for its fiscal year ending February 2013. Kreeger's stated intent is to restore profitability during the fiscal year 2014-15.

Kreeger says that by previously concentrating on a fleet of four-engined aircraft, Virgin "didn't have the right fleet for a rising fuel price environment, so [high] fuel prices have hit us harder".

Virgin is in the midst of a fleet roll-over in which its 19 four-engined Airbus A340s are being replaced by more efficient twinjet Airbus A330s and Boeing 787s. Within five years, the vast majority of the Virgin fleet will be twins "and that by itself remedies a lot of the company's financial difficulty", he says.

Virgin has also suffered financially due to its disproportionate reliance on one economy - the UK - says Kreeger: "When I look at how Virgin is going to compete in the long run effectively, creating stronger revenue-generating capability in the USA is one of the things that will help us be successful in competing for customers."

Virgin Atlantic's commercial tie-up with Delta - which is being implemented as part of the US carrier's December 2012 acquisition of a 49% stake from Singapore Airlines - provides the solution for this conundrum, says Kreeger.

"Delta's distribution in the USA and our product and service will be a hugely winning combination - we think it will take a lot of customers off our competitors and move them on to us," he says. "That will remedy one of our other shortfalls, which has been a reliance on what has been, for the last five years, a pretty weak economy."

Kreeger believes Virgin has suffered due to a lack of connectivity in its network, particularly when compared with arch-rival BA. "We've begun to offer a lot more connections now with [UK domestic operation] Little Red - as well as on our Delhi and Mumbai flights which are timed to connect well with the USA flights," he says.

"So we're creating more connecting opportunities within our network and if you add those things together, along with the continued focus on the product side and the engagement of our team, that combination is why I'm so confident we can get back to being profitable and position us for sustainable success."

Click here for a multimedia version of the Airline Business interview with Craig Kreeger