more to love Annual Report 2018 Virgin Atlantic Annual Report 2018 Contents Strategic report Governance Financial statements About Virgin Atlantic 1 Board of Directors 52 Independent auditor’s report 63 Group at a glance 2 Leadership team 56 Financial statements 66 Our flight network 4 Committees of the Board 58 Other information More to love 6 Directors’ report 60 Corporate structure 108 Chairman’s statement 14 Statement of Directors’ 62 Glossary 109 Case study: our customers 17 Responsibilities Our business model 18 Market review 20 Chief Executive Officer’s Q&A 22 Our strategy 28 Chief Financial Officer’s review 30 Our key performance indicators 35 Case study: introducing 38 the A350-1000 Sustainability 39 Case study: cargo 45 Risk management 46 About Virgin Atlantic more reasons to love us We strive to create unique and irresistible experiences that our customers love – it’s at the heart of everything we do. And that’s why our customers choose us, knowing that they can expect more from us than any other travel company. Combining the strengths of Virgin Atlantic and Virgin Holidays gives us the opportunity to offer our customers more benefits than ever before. Together we aspire to be the world’s most loved travel company. We have reimagined our Economy offering, expanded our flight network and opened the world’s first Departure Beach in Barbados. Together we have unrivalled expertise to create an unforgettable experience for people’s travel and holidays and we love what we do. Learn more For more information please visit: www.virginatlantic.com Virgin Atlantic Annual Report 2018 1 Group at a glance Our purpose is to embrace the human spirit and let it fly. We have a simple goal. By being uniquely Virgin Atlantic, we want to become the airline most loved by our customers. We are achieving this by realising the full potential of our transatlantic joint venture with Delta Air Lines, maximising opportunities with Virgin Holidays, as well as empowering our people with the right skills and tools to deliver that unique Virgin Atlantic experience. Our international cargo division is committed to delivering unrivalled consistency and reliability for customers across the globe. The offering spans general freight, express courier, automotive, pets, perishables and pharmaceuticals to over 500 destinations. Built on a belief that everyone can take on the world, Virgin Holidays gives aspiring adventurers the confidence to make their holiday dreams real. By offering a differentiated experience and a brand that’s known and trusted as a consumer champion, Virgin Holidays continues to be a leading tour operator to the US and Caribbean, as well as offering holidays to other popular longhaul destinations. 2 Virgin Atlantic Annual Report 2018 Our vision to be the most loved travel company Our values Be amazing Think red Make friends From the basics to the Red is the colour of the true People are our beating heart. brilliant, we’ll make amazing Virgin spirit. It’s bold, joyful They enliven our teams, connect our art. We’ll set standards, and stylish. It’s not afraid to with our customers and make create memories and take change the game, champion every partnership flourish pride in meeting the soaring the customer and strive for with colour and creativity. expectations of a Virgin brand. the things that exist only in the As the future takes us higher, Life may be short but we imagination. We need to feel friendship becomes our secret embrace our power to make it and act at our best and red is weapon – helping us to stand meaningful, adding accents of the passion, the positivity and up for diversity and inclusion green to our signature red and the innovation that takes us all while opening minds to a more thinking sustainably about our the way. socially responsible, culturally planet – for amazing people, aware world. amazing experiences and amazing love. Learn more Learn more about our strengths; see our business model on pg 18 and find out about our new Velocity plan on pg 29. Virgin Atlantic Annual Report 2018 3 Our flight network connecting Britain to the world Flybe Aberdeen Edinburgh Glasgow pe Belfast Euro Knock Manchester East Midlands Birmingham Cardiff London Exeter Heathrow London Gatwick Newquay Southampton Jersey Edinburgh Belfast1 Glasgow1 Air China Manchester London Seattle Portland Minneapolis/ Boston St Paul Detroit Beijing Salt Lake City New York / San Francisco Newark Beijing Chengdu Las Vegas Washington Shanghai Los Angeles Atlanta Shanghai Tel Aviv2 Chongqing Orlando Miami Delhi Hong Kong Mexico City Cancun Havana Antigua Mumbai Montego Bay Aeroméxico St. Lucia Jet Airways Grenada Barbados Tobago Lagos Las Veg Amritsar a Singapore t n Delhi les a K Hong ge s Atla Kong An Tijuana Jaipur Los Ciudad Juarez York JF L o s A New Ahmedabad Hong Kong n gele Orlando Chihuahua B s Hermosillo Kolkata a Singa n eles Monterrey Ba g Ang ngkok k Los Tampico Mumbai p o San Luis Potosi o k London Heathrow re Los Cabos Leon Rarotonga Puerto Vallarta Cancun Goa Hyderabad S Queretaro Virgin Atlantic in Veracruz Bangalore ga Cook Islands Guadalajara po Mexico City Kozhikode Chennai re Villahermosa Delta Air Lines Kochi Tuxtla Gutierrez Thiruvananthapuram Brisbane JV Johannesburg o Air New Zealand Colombo c is c n ra F Virgin Australia (codeshare) n Darwin a S Sydney Flybe (codeshare) Cairns Townsville Auckland Melbourne Auckland Air China (codeshare) Rockhampton New Plymouth Brisbane Ayers Rock Palmerston North Napier Jet Airways (codeshare) Gold Coast Wellington Newcastle Virgin Australia Nelson Aeroméxico (codeshare) Perth Sydney Queenstown Christchurch Adelaide Canberra Air New Zealand (codeshare) Melbourne Dunedin Singapore Airlines (codeshare) Launceston Hobart 1. Flights operate seasonally from these locations. 2. LHR-TLV route starts September 2019. 4 Virgin Atlantic Annual Report 2018 We launched new services and Virgin Australia and Aeroméxico enhanced our partnership network joined our family of codeshare in 2018. Boston and Johannesburg are partners and we expanded our now served twice daily and travellers codeshare destinations with Flybe to New York JFK can choose a sixth in the UK and Delta in the Caribbean. Flybe daily Virgin Atlantic departure. Aberdeen Edinburgh Glasgow pe Belfast Euro Knock Manchester East Midlands Birmingham Cardiff London Exeter Heathrow London Gatwick Newquay Southampton Jersey Edinburgh Belfast1 Glasgow1 Air China Manchester London Seattle Portland Minneapolis/ Boston St Paul Detroit Beijing Salt Lake City New York / San Francisco Newark Beijing Chengdu Las Vegas Washington Shanghai Los Angeles Atlanta Shanghai Tel Aviv2 Chongqing Orlando Miami Delhi Hong Kong Mexico City Cancun Havana Antigua Mumbai Montego Bay Aeroméxico St. Lucia Jet Airways Grenada Barbados Tobago Lagos Las Veg Amritsar a Singapore t n Delhi les a K Hong ge s Atla Kong An Tijuana Jaipur Los Ciudad Juarez York JF L o s A New Ahmedabad Hong Kong n gele Orlando Chihuahua B s Hermosillo Kolkata a Singa n eles Monterrey Ba g Ang ngkok k Los Tampico Mumbai p o San Luis Potosi o k London Heathrow re Los Cabos Leon Rarotonga Puerto Vallarta Cancun Goa Hyderabad S Queretaro Virgin Atlantic in Veracruz Bangalore ga Cook Islands Guadalajara po Mexico City Kozhikode Chennai re Villahermosa Delta Air Lines Kochi Tuxtla Gutierrez Thiruvananthapuram Brisbane JV Johannesburg o Air New Zealand Colombo c is c n ra F Virgin Australia (codeshare) n Darwin a S Sydney Flybe (codeshare) Cairns Townsville Auckland Melbourne Auckland Air China (codeshare) Rockhampton New Plymouth Brisbane Ayers Rock Palmerston North Napier Jet Airways (codeshare) Gold Coast Wellington Newcastle Virgin Australia Nelson Aeroméxico (codeshare) Perth Sydney Queenstown Christchurch Adelaide Canberra Air New Zealand (codeshare) Melbourne Dunedin Singapore Airlines (codeshare) Launceston Hobart Virgin Atlantic Annual Report 2018 5 More to love 6 Virgin Atlantic Annual Report 2018 more opportunities to travel Connecting our customers A global network Our joint venture partnership with Delta Air We announced exciting network growth, Lines (Delta) has expanded our flight network, adding second daily services to Boston giving customers more ways to travel with us. and Johannesburg and a sixth daily flight to With 39 flights across the Atlantic each day New York JFK. We also added new Caribbean and over 230 onward destinations, together codeshare points within our joint venture to we served over five million passengers in 2018. provide customers with even more choice. We continue to outperform all other airlines that In April, we launched our all Virgin travel operate transatlantic flights from Heathrow for experience to Australia with a new Virgin on time performance and customer satisfaction. Australia codeshare. This added 13 new For the fourth consecutive year the joint venture destinations through onward connections dominated the industry Airs@t customer via Hong Kong and Los Angeles. satisfaction ratings.1 Our Flybe codeshare partnership continued As we celebrate the fifth anniversary of to grow, offering greater choice and reward our partnership in 2019, we look forward to to around 30,000 customers through the year. implementing our expanded joint venture with And in December, we launched a new codeshare Delta, Air France and KLM. This growing synergy partnership with Aeroméxico, adding 15 new will build on a strong foundation, enabling us to destinations to our network across Mexico. provide more than 150 daily nonstop flights each way and serve approximately 340 In late