Virgin Atlantic Ltd (Virgin Atlantic) has released its annual financial results for the year ending 31st December 2022. The results reflect 2022 being a year of recovery and ramp up for Virgin Atlantic as the Covid-19 related challenges were overtaken by a surge in customer demand for travel.
Virgin Atlantic reported total revenue of £2.9 billion, recovering to 98% of 2019’s revenues; an underlying EBITDA of £310 million; and a loss of £206 million before tax and exceptional items. Underlying EBIT of £71m returned to pre-pandemic levels of performance (2019: £71m).
In 2022, Virgin Atlantic capitalised on the recovery in customer demand for air travel, holidays, and the continuing demand for air freight. With revenue tracking ahead of expectations and maintaining the benefit of £300 million annual cost saving achieved in response to the pandemic, statutory losses were significantly narrowed from a combined £1.4 billion incurred during the pandemic years of 2020 and 2021. Virgin Atlantic ended the year with a robust cash position of £399 million.
2022 was the first year of the airline’s four-year plan supporting its mission to become the most loved travel company and sustainably profitable. The 2022 financial and operational results demonstrate that the airline’s plan is working and sets up 2023 as a year of delivery and a return to profitability in 2024.
Full Year 2022 Financial Results Summary
Disciplined capacity management, ensuring only cash contributing flights were flown resulted in operating 21,835 sectors, up 61% vs 2021 and at 93% of 2019
Despite the industry wide challenges of ramp up and capacity restrictions at London Heathrow, a focus on operational excellence delivered a completion factor of 99.5%
Passenger capacity (ASKs) increased 178% vs 2021 and passenger numbers increased 297% vs 2021, both recovering towards pre-pandemic levels at 81% and 75% of 2019 respectively
The lifting of international travel restrictions in early 2022 saw a resurgence in confidence and demand for travel. Passenger revenue increased five-fold vs 2021 to £2.1bn and returned to pre-pandemic levels. On a quarterly basis, Q3 and Q4 recorded total airline revenue at 108% and 109% of 2019 levels respectively reflecting the sustained demand for travel
Passenger unit revenue (PRASK) grew to 5.26p, up 23% vs 2019. The airline delivered record PRASK performance in six months of the year, combining a return to pre-pandemic load factors with double-digit growth in passenger yields
Virgin Atlantic Holidays also benefitted from the resurgence in travel demand, with 250k customers generating revenues of £487m, 78% of 2019 levels
Virgin Atlantic Cargo operated 1,117 cargo dedicated sectors and delivered revenue of £377m, 75% above 2019 and surpassing expectations
Continued focus on cost discipline resulted in total airline non-fuel costs of £1.5bn, down £173m on 2019, reflecting the impact of £300m annual cost initiatives, fully delivered in 2020 and 2021
Virgin Atlantic recorded a full year underlying EBITDA of £310m, up £471m vs 2021 and recovering to 92% of 2019, an underlying EBIT of £71m, in line with 2019, an underlying loss of £206 million before tax and exceptional items, £391m improved vs 2021 and a statutory loss of £342m, £144m improved vs 2021
Virgin Atlantic ended the year with a strong cash position of £399m and is set up for a year of delivery in 2023, having paid down £92m of debt and purchased three slot pairs at London Heathrow.
Despite the impact of Omicron on the first three months of the year, 2022 marked the first year of recovery from the pandemic, in tandem with the recovery in passenger demand and Virgin Atlantic’s financial performance, for a sixth consecutive year, the airline was voted Britain’s only Five Star Airline by APEX, as well as being recognised as Best Overall airline in Europe in the Official Airline Ratings.
2023 represents a year of delivery, the second year of the airline’s four-year plan. In 2023, underlying EBITDA is expected to increase to a record level for Virgin Atlantic. Despite this, the combined effects of a weak pound, persistent high inflation, fuel prices and rising interest rates mean a return to profitability is now expected in 2024.
Shai Weiss, CEO, Virgin Atlantic commented: “2022 was Virgin Atlantic’s year of recovery and ramp up, when we reached new heights. While we ended the year well, it began with the new Omicron strain of the Covid-19 virus and aviation was faced with the return of restrictions on international travel. Thankfully, through the collective efforts of the industry, it was possible to prove that travel was safe, resulting in the removal of remaining restrictions. The devastating war in Ukraine dramatically affected fuel and energy prices and global supply chains. In parallel, inflation stoked a cost-of-living crisis, particularly felt by UK consumers as energy prices rocketed. These factors contributed towards losses, albeit significantly improved on 2021.
“By Spring, robust customer demand returned, fuelled in part by revenge travel and the return of the corporate traveller. Failings at Heathrow and complexities of ramp up pushed our operation to its limits but despite these challenges, I’m proud to say we came through the summer with industry-leading completion factors of 99.5%, getting customers to where they needed to be with fewer cancellations and delays than competitors. Testament to our talented teams on the ground and in the air, who go above and beyond to delight our customers day in, day out.
“Our amazing people are what make Virgin Atlantic special, and my thanks goes to them all for their continued support and commitment in making our recovery a success. Belief, determination, and conviction ensured our survival. In 2022, it allowed us to move into recovery by proving that our plan is working. In 2023, it is propelling us into our year of delivery, when we deliver for our people and our customers, ensuring everyone can take on the world, driven by the vision of becoming the most loved travel company and sustainably profitable.”
Oli Byers, CFO, Virgin Atlantic commented: “Our 2022 financial results reflect the first year of recovery following the immense challenges faced by our industry due to the Covid-19 pandemic. Our financial and operational performance demonstrates that our plan is working.
“Maintaining our commitment to customer experience throughout the pandemic ensured that when passenger demand returned, Virgin Atlantic was positioned to capitalise – and we delivered, with 2022 passenger revenues recovering to pre-pandemic levels.
“To deliver sustainable profitability requires a continuous focus on capacity and cost discipline. In 2022 we maintained this focus, realising the benefit from £300m in annual cost savings alongside improving our fleet utilisation. 2023 is set to deliver more flown sectors vs 2019 with four fewer aircraft.
“2023 will be a year of delivery as we build on the successful recovery achieved in 2022. We have cause for optimism as demand for travel has remained strong through the first quarter of 2023 balanced with continued macro-economic uncertainty. We anticipate growing underlying EBITDA in 2023 and are on track to return to profitability in 2024.”