Virgin Atlantic has pledged to invest £100 million on product innovation, including revamping its cabin interiors, lounges and buying new aircraft, in an attempt to attract new business.
The plans were announced today as Virgin posted a pre-tax profit of £18.5m for the fiscal year to February 28.
Its revenues rose by 13% to £2.7bn, after losses of £132m in the previous financial year.
Chief executive, Steve Ridgway said the airline would invest £75m on new aircraft and a further £25m on upgrading the cabins and installing in-flight technology to allow customers to use the internet onboard.
Ridgway has also warned of a tough year ahead: “Since the turn of the year, market conditions have become tougher, with increased capacity, faltering consumer confidence and high fuel prices.
“We are also seeing softer trading in the areas that are hit hardest by the continued rises in Air Passenger Duty, particularly the Caribbean routes and premium economy cabins.
“While business traffic remains strong, demand in the economy cabin is more challenged.”
Drop in Skytrax rating
Virgin Atlantic – owned by Sir Richard Branson’s Virgin Group (51%) with the remaining share held by Singapore Airlines – has invested heavily in its brand in recent years.
Its latest £100m investment in product innovation comes as the carrier slipped down from a 4* to a 3* airline in July in the Skytrax ranking for airline product and service quality.
In a statement in July, Edward Plaisted, chairman and CEO of Skytrax said: “Virgin Atlantic has been a long-standing 4-Star Airline, and was well known for many pioneering product and service initiatives during its history.
“More recently they seem to have undergone an image building exercise with glossy advertising, but the projected standards are just not being delivered to customers at this time, and our audit analysis is pointing to the fact that Virgin Atlantic is currently suited to 3-Star Airline ranking.”