03 June 2009

A major US carrier will fail Ã¢â¬' Virgin boss predicts

A major US carrier will fall victim to the recession, Virgin Atlantic founder Sir Richard Branson has warned.

He described the current year as "the worst in the history of aviation" due to the economic downturn and a sudden rise in oil prices (see previous TravelMole story).

He admitted that Virgin Atlantic would not repeat last year’s group pre-tax profit performance of more than £60 million in 2009, saying the business travel sector was particularly difficult.

"We are having to batten down the hatches but relatively we will do better than most," Sir Richard told TravelMole in advance of the airline’s 25^th anniversary on June 22.

He said he remained "absolutely confident" that Virgin Atlantic would be around for its 50^th anniversary provided competition authorities protect it from potentially damaging actions such as the proposed effective merger of British Airways’ and American Airlines’ transatlantic operations.

But Sir Richard described some big US airlines as being "weak" and predicted: "Within 12 months, I would not be surprised if a big American carrier didn’t go".

He added: "Oil prices have suddenly doubled - that’s a massive burden on the industry. In a recession you would normally have low oil prices; that is not the case this time."

The weakening of the value of the dollar will also add extra pressure on airlines in the US, Sir Richard said.

He described the quality of US domestic airlines as being "extremely poor" and saw this an opportunity for offshoot Virgin America to become a "major force".

by Phil Davies in Toyko

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Your Comments (6)

Don't think So

Gov will bail them out. Blake WWW.planetamex.com

By blake fleetwood, Saturday, June 20, 2009
No Surprise Here

Chris Ballam, please don't look to the gov't for a bail out. Virgin Atlantic is probably right, but please don't go down the bail out road. We already know what happens when Govt. runs the transportation industry ie; Amtrak. I love being a Travel Agent(22 years),however most travel is still considered a luxury. America's only source of mass transportation should never fall victim to a govt' run industry. DISASTER is the only word that comes to mind. Besides there are plenty of people in my hometown that have never been on a plane, why ask them to give taxpayer dollars for something they could not afford on their own.

By Cecilia Gagliardi, Saturday, June 13, 2009
US airline to fail

U honestly think the president will let ANY US airline fail....? we have been here before many times...including 9/11 and do u see any carriers NOT flying in the states..Truth is NO ONE will go pop....The US authorites wouldnt let it happen....

By chris ballam, Monday, June 8, 2009
Prediction?

"I would NOT be surprised if a big American carrier DIDN'T go"

By Martin Rivers, Thursday, June 4, 2009
It's a non-story

Sir R isn't saying anything we don't already know. It won't be Virgin America, as they are not a 'Major'. It will probably be United. But nothing new there!

By Tim Anderson, Wednesday, June 3, 2009
I think it will be Virgin that fails.

I think it will be Virgin that fails. Why? Because I just felt like adding my own spurious comment to that of Richard Branson's. Why is destructive PR trash like this published? Lazy journalism.

By Alan Bowen, Wednesday, June 3, 2009