Friday, Jun 20, 2014
Brussels: Virgin Atlantic’s new joint venture with Delta is a key driver in returning the airline to profitability this year, its chief executive Craig Kreeger told Gulf News.
The airline turns 30 this month and Kreeger, who joined the airline 16 months ago replacing long standing boss Steve Ridgway, has been tasked with overseeing a two year turn around of the British carrier.
Virgin Atlantic made a £124.8 million loss in the year to February and a £51 million loss in the year to December 2013.
The airline has adjusted its financial year and found £45 million in “back of house” savings since Kreeger came aboard.
“We’re absolutely on track to be profitable this year”, Kreeger said and ruled out large scale job cuts despite the cost saving measures.
Kreeger spoke to Gulf News on the sidelines of the SITA Air Transport IT Summit in Brussels on Wednesday.
Like many other airlines the profit margin is likely to be slim, however, a tight lipped Kreeger is reluctant to release his target.
The Delta partnership, which started in January, is pivotal to Kreegers turnaround. Virgin Atlantic flights landing in New York JFK now connect to 44 destinations with Delta, Kreeger points out.
The partnership also gives Delta an edge in the US market. It’s passengers can fly with Virgin Atlantic direct from Miami and Los Angeles to the UK, with Delta flights there is a stopover on these routes.
Delta bought a 49 per cent stake from Singapore Airlines at a bargain price of £214 million when compared to the £600 million Singapore Airlines paid several years earlier.
Fleet renewal is another driver that is pushing the airline back to profitability, Kreeger said. Virgin Atlantic saved £50 million in costs and fuel last year compared to the year earlier due to flying newer, more fuel efficient aircraft
This September, Virgin Atlantic will take the first of 17 Boeing 787 Dreamliners, which will over the next four years account for nearly half of the airlines existing fleet of 39 aircraft.
Before Kreeger joining, his predecessor, Ridgway, established a feeder carrier, Little Red. The airline, which feeds traffic from Aberdeen, Edinburgh and Manchester into Virgin Atlantic’s London Heathrow hub, has so far failed to take a slice of the UK domestic market. Last year, it flew with 60 per cent of seats empty.
However, Kreeger is not ready to write off the project, although he has previously said the airlines December loss would have been less if it was not for Little Red.
“I did think and do think that it (Little Red) is a good idea,” he said.
Kreeger, declining to release current passenger number, said that the carrier is improving. Little Red uses aircraft leased from Aer Lingus.
In its cost cutting measures, Virgin Atlantic axed its only Australia route, Sydney, earlier this year.
Despite the axe of Sydney, Kreeger said that Virgin Atlantic strategy is to build a network to serve destinations that are popular with UK travellers.
He said that Dubai is one of the airlines most popular destinations.
On the Gulf carriers, Emirates, Etihad Airways and Qatar Airways, Kreeger said “they are one of the biggest drivers of change in our industry right now.”
Kreeger said he would be open to a partnership with one of the Gulf majors but that there are “no plans” for the immediate future.
By Alexander Cornwell Staff Reporter
Gulf News 2014. All rights reserved.
