Virgin Atlantic has turned in a pre-tax operating loss of more than £80 million ($125 million) for its full year, which ended on 29 February.
The UK long-haul carrier's revenues were up by 3% to £2.7 billion as passenger numbers increased by 2% to 5.4 million, with a load factor of 78%.
But the airline failed to post a profit for the year in a market which chief executive Steve Ridgway describes as "incredibly challenging". Fuel unit cost before hedging rose by 32%.
"With the prevailing uncertainty in the economy, sky-high fuel prices and a 25% hike in our air passenger duty fees, converting this sales growth into profit has not been possible," Ridgway concedes.
Virgin Atlantic is aiming to reduce operating costs by £50 million through an "increased efficiency drive", says the operator.
For the first quarter of the current financial year the carrier's revenues have increased by 5.8% to £482 million. Passenger numbers for the period rose by 2.3% with a load factor of 77%.
"We have had an encouraging start to the year," says Ridgway, adding that the introduction of more Airbus A330s this year will "further enhance" the fleet and generate "significant additional cost savings".
Virgin's cash position at the end of the year was £487 million.