A major US carrier will fail – Virgin boss predicts
Tuesday, 03 Jun, 2009
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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 25th anniversary on June 22.
He said he remained “absolutely confident” that Virgin Atlantic would be around for its 50th 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
Phil Davies
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