by Dongying Wang

    LONDON, May 27 (Xinhua) -- Virgin Atlantic Airways, Britain's second largest carrier, has announced a profitable year despite a sinking economy which has hit other airlines hard.

    During the last financial year ending in February 2009, the airline harvested 68.4 million pounds (99 million U.S. dollars) in pre-tax profits, a rise from 34.8 million pounds (51 million dollars) on a yearly basis.

    In the report released on Tuesday, the airline cited an increase in the number of premium travelers as a key factor behind the strong results. The total number of passengers it carried during 2008 increased to 5.77 million.

    Prudent management decisions in a year which has seen the most volatile trading conditions in its 25 year history are also considered to be an important instrument to its success. The profits have been made despite high oil prices, which peaked at 147 dollars per barrel in 2008.

    Founded in 1984, Virgin Atlantic was developed as an offshoot of Richard Branson's Virgin Group, which was better known at the time as a leading light in the world of pop and rock music. Virgin Atlantic is now 51 percent owned by the Virgin Group, and 49 percent owned by Singapore Airlines.

    Statistics show that Group sales, including leading tour operator Virgin Holidays, rose 8.4 percent to 2.579 billion pounds(3.7 billion dollars) over last year.

    Commenting on the successful year, Sir Richard Branson, president of Virgin Atlantic, said "the last financial year has proven to be the most volatile yet in our 25-year history."

    "To increase profits against a backdrop of such a severe recession is an excellent achievement by all of our staff at Virgin Atlantic," Branson added.

    His comments were echoed by Virgin Atlantic Chief Executive Steve Ridgway.

    "We are winning market share from our competitors during the toughest trading environment ever," Ridgway said.

    "With some of the lowest fares ever, consumers have never had it so good for so long. Our load factors remain resilient as travelers take advantage of these bargain fares, proving the value of vigorous competition," he elaborated.

    BIG CONTRAST

    Virgin Atlantic's success story came in stark contrast to the announcement made last week by British Airways (BA) of its record losses during the past 12 months.

    The BA, the largest airline operator in Britain, said it had recorded a pre-tax loss of 401 million pounds (636 million dollars) during the past year, the worst performance since its privatization two decades ago.

    The BA made a record profit of 922 million pounds (1.5 billion dollars) in 2007-2008. The drop in BA business is seen as a strong indicator of how the recession is affecting the aviation industry.

    Falling passenger numbers and reduced cargo demand were cited as major factors behind the losses sustained by the BA.

    Meanwhile, high fuel prices last summer contributed to the BA's220 million pound (350 million dollars) operating loss as its total fuel bill reached almost 3 billion pounds (4.35 billion dollars), the airline revealed.

    COMPETITION PRESSURE FROM BA

    On a proposed merger of the BA and American Airlines (AA), Virgin Atlantic said that was not in the interests of consumers.

    However, nothing is yet finalized and the U.S. Department of Transportation (DoT) is due to rule on the BA/AA application by the end of October.

    Virgin Atlantic has submitted new evidence to the DoT in relation to the BA's third attempt to tie-up with American Airlines.

    Branson has said the effective merger of the BA and the AA would create a "monster monopoly," with the BA locking out competition and having a stranglehold on some of the busiest routes in the world into and out of London's Heathrow Airport.

    The BA and the AA would be able to use their market power to raise fares, lessen service levels and inhibit innovation, Virgin Atlantic claimed.

    "I am sure that the Department of Transportation will put the interests of consumers first rather than bow to the influence of the big-spending airline, with strong political connections," Branson said.

    The BA already has around 40 percent of take-off and landing slots at Heathrow Airport, compared with Virgin Atlantic's 3 percent.

Special Report:  Global Financial Crisis