Corporate traffic has given Virgin Atlantic a much needed boost as it battles against fuel prices, sending annual profits soaring by 38% in the last financial year.

The airline, which is 51% owned by Richard Branson’s Virgin Group and 49% by Singapore Airlines, said premium passengers were up 22% on the year which had contributed hugely to its underlying pretax profit for 2007/8 of £60.9 million, up from £44 million the previous year.

A spokesman for the airline said it had gained many BA passengers thanks to the carrier’s “ongoing” problems including the Terminal 5 debacle.

Virgin chief executive Steve Ridgway said: "While the outlook remains pretty overcast for the aviation industry, the winners will be those airlines that focus on offering the best customer service. We have diversified our route network, focused on providing the best product in Upper Class, Premium Economy and Economy, hedged our fuel purchasing and built up a strong cash position." By Dinah Hatch