Virgin Atlantic FY2023 Results

Virgin Atlantic has released its financial results for the year to 31 December 2023.

The airline reported an overall loss before tax and exceptional items of £139 million.

https://corporate.virginatlantic.com/gl ... sults.html

Results reflect progress made in a year of sustained customer demand, as the airline capitalised on continued desire for premium leisure air travel and holidays. Virgin Atlantic reported record total revenue of £3.1 billion, up £265 million versus 2022.

Continued cost discipline, combined with enhanced fleet utilisation, contributed towards record Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA) of £352 million. Earnings Before Interest and Taxes (EBIT) of £80 million surpassed 2019 results, achieving a key milestone on the path to sustainable profitability. Losses before tax and exceptional items narrowed to (£139) million from (£206) million in the previous year and Virgin Atlantic is on course to return to profitability in 2024.

Profitability at the cost of customer experience... ahh VS is becoming a proper airline.

[mitchja]

Full report can be found here

Couple of interesting facts coming out from these results:
- A333s with us until 2028 after phasing of new aircraft pushed out two years.
- VS benefited from other income of £72.7m due to unused COVID credit vouchers
- Cost of lending has increased so whilst debt was paid off - interest increased.
- A couple of interesting footnotes over Virgin group and Delta cash injections during the pandemic - including deferred payments to delta as part of JV - delta and virgin settled various items outstanding via conversion into shares.

Whilst free cash is up, the debt repayments will loom large over VS for at least 5 years. They need to focus on going after the profitable routes - things look okay, however when compared to peers - show the weakness of VS. The purpose of most loved and sustainably profitable - the latter part, should be a solid focus for VS if its to see the next 10 years.

What i do find a little concerning is VS make no reference to the heavy overhaul due to commence on the 789s. This doesn't seem to be accounted for - whereas AirNZ has put aside c.400m NZD for this - showing the cost of refits if they go ahead, and bearing in mind VS would need to likely refit the J cabin as a minimum... suggests to me we won't be seeing any changes to the 789s anytime soon.

Couple of interesting facts coming out from these results:
- A333s with us until 2028 after phasing of new aircraft pushed out two years.
- VS benefited from other income of £72.7m due to unused COVID credit vouchers
- Cost of lending has increased so whilst debt was paid off - interest increased.
- A couple of interesting footnotes over Virgin group and Delta cash injections during the pandemic - including deferred payments to delta as part of JV - delta and virgin settled various items outstanding via conversion into shares.

Whilst free cash is up, the debt repayments will loom large over VS for at least 5 years. They need to focus on going after the profitable routes - things look okay, however when compared to peers - show the weakness of VS. The purpose of most loved and sustainably profitable - the latter part, should be a solid focus for VS if its to see the next 10 years.

What i do find a little concerning is VS make no reference to the heavy overhaul due to commence on the 789s. This doesn't seem to be accounted for - whereas AirNZ has put aside c.400m NZD for this - showing the cost of refits if they go ahead, and bearing in mind VS would need to likely refit the J cabin as a minimum... suggests to me we won't be seeing any changes to the 789s anytime soon.

Yes they seem to have pushed the retirement back from 2026 to 2028… even though at the end of this year they will have 8 Neos, where originally they had 10 330 (now 8 as 2 already gone)… which I am starting to think they need to keep them so they have spare bodies when they start refitting the 789’s.

The debt levels does not surprise me. They accumulated a lot of that during 2020 and 2021 just to survive during the COVID lockdowns and especially after the UK government refused to step in with support beyond the standard support available to all businesses such as furlough. I'll stop there in order to avoid going in to what my thoughts are with the government and their (lack of) support for civil aviation. The new planes obviously won't be cheap either.

Retaining some A330-300s until 2028 makes sense. If they want to expand whether new planes come now or later in the decade, that is the only logical option and would be far cheaper and quicker to achieve than by ordering more new planes. The oldest A330-300 is also only 13 years old and VS have previously operated planes twice that age (DL tend to keep aircraft for even longer), they're decent aircraft for some of the shorter destinations such as TLV, US East Coast and Caribbean and there's not likely to be many takers for used widebody aircraft when there's not exactly a shortage of them either.

Providing the interiors are kept up to date, I see no reason why VS can't operate some of them for another decade or more. I expect many passengers couldn't care less about the fleet supposedly being young if carpets are threadbare, seats worn/broken or if the IFE isn't working properly on take-off and there's a long day flight ahead.

Profitability at the cost of customer experience... ahh VS is becoming a proper airline.

I see no reason why it can't be a case of one or the other, though I know what you mean. Unfortunately, the focus if I was Shai Weiss is addressing the large debt pile and ensuring this is done both sustainably, in a reasonably timely manner and not sacrificing growth.

This might mean more tough decisions in the future and will also influence what VS do next re. route network, other initiatives, etc. That said, some stability in areas VS can't control such as gropolitical events, conflicts, the economy, GBP/USD exchange rates and inflation might help as it does seem to be case that most years it's always the case of being "on track to profitability".