Virgin Atlantic Ltd (Virgin Atlantic) has released its annual financial results for the year ending 31 December 2021. The results reflect an intensely challenging year for Virgin Atlantic in 2021 and the continuation of the immense challenges the airline industry faced due to the Covid-19 pandemic. Virgin Atlantic reported total revenue of £928 million, up £60m on 2020, yet down from £2.9 billion in 2019; an EBITDA loss of £166 million; and a loss of £594 million before tax and exceptional items.
Virgin Atlantic ended the year with a robust cash position of £580 million, delivered by raising £670 million new capital, including £400 million shareholder investment completed in December 2021; maintaining £300 million annual cost savings; capitalising on pent up demand following the opening of the transatlantic corridor; and delivering record cargo revenue of £448 million. These actions narrowed statutory losses by £378m vs 2020 to £486m in 2021, and helped to set the airline up for success in 2022.
Full Year 2021 Financial Results Summary
- Disciplined capacity management, ensuring only cash contributing flights were flown resulted in operating 13,600 sectors, up 28% vs 2020 and at 58% of 2019. Virgin Atlantic Cargo operated 1,633 cargo dedicated sectors
- Passenger capacity (ASKs) increased 9% vs 2020 and passenger numbers remained flat vs 2020. Both remain below pre-pandemic levels at 29% and 27% of 2019 respectively, reflecting the impact of international travel restrictions being in place throughout the majority of 2021
- Passenger revenue of £410m, at 20% of 2019, continued to be severely impacted by the pandemic. The relaxation of travel restrictions in the last three months of the year resulted in Q4 passenger revenue growing to 42% of 2019
- Virgin Atlantic Cargo (VAC) delivered record revenue of £448m, up more than 200% vs 2019 and 40% vs 2020 respectively. VAC continued to play a vital role in ensuring Personal Protective Equipment and testing kits were transported from China into the UK, as well as sending oxygen concentrators to India
- Focus on cost discipline resulted in total non-fuel costs of £1bn, down 39% on 2019, reflecting the impact of £300m annual cost initiatives, fully delivered in 2020
- Virgin Atlantic recorded a full year underlying EBITDA loss of £166m, up £94m vs 2020, a loss of £594 million before tax and exceptional items, up £62m vs 2020 and a statutory loss of £486m, up £378m vs 2020
- Virgin Atlantic ended the year with a strengthened cash position of £580m, having raised more than £670m new capital, including the completion of £400m shareholder investment in December 2021
While the pandemic continued to weigh heavily on the Virgin Atlantic’s financial performance, the airline continued to deliver unrivalled customer service and was voted Britain’s only Five Star Airline by APEX for the fifth consecutive year in the Official Airline Ratings. As the airline ramped up operations in the final quarter of the year, it was able to welcome back more than 1,100 crew and pilots from holding pools created as part of the 2020 response to the pandemic.
2022 represents the first year of Velocityx, the airline’s four year plan supporting its mission to become the most loved travel company and sustainably profitable. In 2022, losses are expected to significantly narrow again as passenger demand and international travel returns at scale. The Delta and Omicron variants and continued travel restrictions meant that ramp up was delayed and demand curtailed such that the airline now expects to return to profitability in 2023.
Shai Weiss, CEO, Virgin Atlantic commented: “2021 started with hopes for recovery, following the successful £1.2bn solvent recapitalisation of the airline in September 2020, underpinned by more than £300m annual structural cost savings fully delivered. However, with ongoing restrictions and the rapid spread of the Delta and Omicron variants, customer demand was materially impacted and the year became even more challenging than previous, despite the vaccine rollout.
“Persistent volatility in international travel, fuelled by ever changing restrictions and testing requirements, resulted in significant losses and a decline in passenger numbers, with an improvement in November as our heartland destinations in the US opened up to UK travellers, following months of cross-industry campaigning to open the skies.
“The completion of £400m shareholder investment in December 2021 sets us up for success in 2022, as we take advantage of the return of customer demand. We have much to look forward to, from the launch of a new route to Austin, Texas in May – our first new US route in five years – to the introduction of the A330-900 in the Autumn, continuing the transformation of our fleet into the youngest and cleanest in the sky.
“My sincere thanks go to the amazing people of Virgin Atlantic for displaying the most impressive team spirit I have ever seen. Together we turn our focus to the opportunity ahead and look forward to 2022 as a year of transition, from survival to recovery and on to profitability by 2023. While we have learned we can’t predict the future and there will be significant challenges ahead, the outlook is full of promise. This will be the year we get back to our very best for our people and our customers.”
Oli Byers, CFO, Virgin Atlantic commented: “Our 2021 financial results reflect the continued challenges faced by our industry due to the Covid-19 pandemic - aviation was one of the first industries to be affected and remains one of the last to fully recover. During 2021 we successfully raised over £670m of new capital and ended 2021 with a robust cash position of £580m.
“2022 will be a year of transition as we move from survival into recovery and capitalise on the return of customer demand. We have cause for optimism balanced with macro-economic and political uncertainty, alongside the residual risks of the pandemic. We anticipate a return to profitability in 2023, driven by a recovery in air travel demand and more than £300m annual cost savings, already delivered.
“With the unwavering commitment and belief of our people, our customers, our partners and our shareholders, together we have ensured that Virgin Atlantic is emerging from the pandemic in a strengthened financial position and continues to play a vital role in the recovery of UK economy, proudly flying and reuniting families, friends and colleagues around the globe for decades to come.”