23 August 2000
Virgin Express loses £3m as fuel costs soar
By Alistair Osborne, City Correspondent
Virgin Express, the low-cost airline, nosedived into the red in the second quarter of this year because of soaring fuel prices and the weak euro.
The Brussels-based company, which is 51pc-owned by Sir Richard Branson's Virgin Group, yesterday posted a Eu6.4m (£3.8m) loss before tax for the three months to the end of June, compared with a Eu3.3m profit a year earlier.
The shares, which are quoted in Brussels and on Nasdaq, closed down Eu2.05 at Eu9.3 on the Brussels exchange as the airline warned that "the continued high price of fuel and the strong US dollar will weaken our results".
David Hoare, chairman, said the fuel bill had almost doubled over the period, while total costs rose by 18pc to Eu87m, mainly as a result of the euro's falls against the dollar.
The airline accounts in euros but many of its costs, including aircraft leasing charges, are incurred in dollars. Mr Hoare said: "Our Eu6.4m loss for the quarter would have been a Eu1.9m profit, if fuel prices and the dollar had been at 1999 levels."
Although scheduled revenues grew by 15pc over the period, load factors fell and Mr Hoare said: "Our current distribution system is not sufficient to fill our aircraft and needs to be expanded."
The airline is in talks with operators of computerised reservation systems, including Galileo and Amadeus, to widen its sales and marketing network by the fourth quarter. Yves Panneels, spokesman, said: "We cannot do much about fuel prices and the dollar but we are trying to fix and simplify our business where we have control."
In May it cut two unprofitable routes - Madrid-Rome and Barcelona-Rome - and may stop flights to Stansted in the winter to focus on Heathrow and Gatwick.