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Virgin Atlantic’s Weiss bullish on network strategy

Leading an airline that has only sporadically turned a profit over the past 10 years must be a challenging task – especially with the group's home market undergoing political convulsions, and with a possible global downturn around the corner.

But given the breezy charm of Shai Weiss, chief executive of Virgin Atlantic, you would never know it.

"We won't be profitable this year, but we're hitting our numbers," he said at the World Aviation Festival in London on 5 September. A key feature of Weiss's strategy involves transforming Virgin Atlantic from a point-to-point airline to a network carrier. The takeover of FlyBe by Connect Airways, partly owned by Virgin Atlantic, is part of this, with FlyBe already helping to feed passengers onto the group's flights.

Ultimately, Weiss's vision is for Virgin Atlantic to become the UK's second network carrier behind British Airways.

A younger, more streamlined fleet will help. The airline's eight Boeing 747s are set to be retired by 2021, with its five Airbus A340s going even sooner than that. Both types will be replaced with more efficient A350-1000s. "The idea is to replace a four-engine plane with a two-engine plane," saving on fuel costs in the process, notes Weiss.

Although the plan should boost the bottom line, Weiss notes that the state of the global economy is unlikely to lend the group support. Brexit is another concern, especially the decline in the British pound, which among other things pushes the price of jet-fuel higher.

But every cloud has a silver lining: "If there is a global recession… given the competitive market… there could be opportunities, some of the weaker players may not be able to sustain themselves," says Weiss, suggesting that the fall of rivals could give the group a windfall.

While Shai was reluctant to name any airline in question, the interviewer, Bloomberg's Guy Johnson, had less scruples: "How big a deal would it be if Norwegian wasn't here?," he asked. "There’s a lot to play for… we are ready for any fight," was Weiss's diplomatic response, noting later in the session that, in his view, long-haul, low-cost operations with widebody aircraft does not work.

While Virgin Atlantic might hope for reduced competition, it will soon be facing the opposite on some transatlantic routes in the form of JetBlue, who are coming to London from the US in 2021. The low-cost airline is exploring the possibility of serving multiple London locations, JetBlue chief operating officer Joanna Geraghty told the industry gathering earlier during the day.

"We are ready and she [Geraghty] better be ready," was Weiss's bullish response, noting that Virgin Atlantic is confident in their product and the strategy of becoming an airline that is known for its service and ethos. Despite the presence of the new and aggressively cost-conscious player in the transatlantic market, Weiss believes that fares on the route will be determined by what happens to marginal players operating in the market.

On only one subject did Weiss seem to be genuinely frustrated: Heathrow. "We would like to double in Heathrow – we cannot do that without slots," he laments, with the current set-up disadvantaging the group vis-a-vis British Airways.

While Virgin Atlantic would be a large beneficiary from a third runway being built at the airport, the expansion scheme remains highly controversial.

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