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Virgin Atlantic has reported a profit for the first time since the pandemic, but warned of early signs of a slowdown in demand for transatlantic flying from US consumers.
The airline, which is majority owned by Sir Richard Branson’s Virgin Group, on Monday reported an annual profit before tax and exceptional items of £20mn for 2024, up from a loss of £139mn a year earlier.
The airline last reported a profit in 2016. It has been slower to recover from the pandemic than its biggest rivals such as British Airways owner International Airlines Group, which has had two years of record profits built on high demand for travel across the Atlantic, particularly the most expensive seats.
“2024 was a turning point for Virgin Atlantic,” said chief executive Shai Weiss.
Like BA, it is highly reliant on lucrative transatlantic routes between the US and Europe.
Oli Byers, chief financial officer, said Virgin Atlantic had “started to see some signals that US demand had been slowing” over the past few weeks. “We think that is quite a natural reaction to general consumer uncertainty,” he said.
Byers added that the declines were from a high base, and the airline still hoped to increase its revenue from US bookings in 2025.
IAG shares closed down about 7 per cent following the comments from Virgin Atlantic.
Analysts have questioned whether the boom in transatlantic flying could be hit by the worsening economic picture in the US, as well as tensions between the US and Europe, including over tariffs.
The biggest US airlines warned this month of a slowdown in domestic demand, but said it had not spread to international trips yet.
Last week the chief executives of Europe’s three biggest long-haul airline groups — IAG, Air France-KLM and Lufthansa — said they were monitoring booking patterns, but had not seen a decline in demand for transatlantic travel.
“It is concerning for us . . . but as of today, we don’t see any material change in forward bookings,” Air France-KLM’s chief executive Ben Smith said on Thursday.
Analysts at Barclays have estimated that transatlantic routes are responsible for well over half of the three airlines’ earnings before interest and tax, and warned this month that the slowdown in the US domestic market may spread.
They added that tensions between the US and Europe could lead to fewer people choosing to cross the Atlantic for holidays.
“We recognise this call may be early. We hear only confidence about the Atlantic from the airlines to date. However, we still think a weakening trading environment on the north Atlantic will likely soon emerge,” the analysts said.
Virgin Atlantic’s recovery has been slowed by the cost of servicing the more than £1bn in debt it took on to survive the pandemic. Unlike many of its rivals, it was denied access to government funds.
Virgin Group owns 51 per cent of the airline, while the remaining 49 per cent is owned by US group Delta Air Lines.
Virgin Atlantic reported record passenger revenues of £2.6bn in 2024, up by £179mn year on year. It increased seat capacity by 8 per cent and reported “continued demand for business and premium leisure travel”.
The airline said its four-year turnaround plan to become “sustainably profitable”, launched in 2022 and due to finish in December, was working.
