Fly safe, fl y well Annual Report & Financial Statements Our vision is to become the Contents travel company most loved Our purpose 04 Chairperson’s statement 06 Timeline of 2020 10 CEO Review of 2020 12 CFO Review of 2020 18 Our values Our Key Performance Indicators 24 Creating value for our stakeholders 26 Think Red Sustainability 28 When we think red we connect to the true spirit of Virgin. Risk management 36 Innovation, passion, positivity. From day one we’ve hunted new ways Corporate governance 50 to champion our customers, changing the game with style and a smile. We don’t just push boundaries, we break through them. We Directors’ report 54 are our future and we think about that in every decision we take. Red is us at our blazing best. Directors’ responsibilities statement 57 Corporate structure 58 Make Friends Independent Auditor’s report 60 Financial statements Virgin loves people. It’s how we treat one another that makes us special. We embrace our team-mates, customers and partners. We Consolidated statement of comprehensive income 64 celebrate everyone’s individuality and look for the good in everyone – while following through on what we say we’ll do. And we never Consolidated statement of financial position 65 forget what makes us special. Consolidated statement of changes in equity 67 Consolidated statement of cash flows 69 Notes 70 When you’re a Virgin brand, people expect more from you. So we expect more from ourselves. The small details are as important to us as the grand gestures. We act with the greater good of the business in mind. We’re here to be amazing. Because life’s too short to be anything less. Pages 6-48 comprise the Strategic Report for the year. Our purpose Everyone can take on the World Our corporate purpose reflects both our business activities and our corporate culture of inclusivity, activism and challenger spirit which has defined Virgin Atlantic throughout its existence. Our promise To create thoughful experiences that feel brilliantly different, at every opportunity. 4 Virgin Atlantic Annual Report 2020 Chairperson’s statement Chairperson’s statement continued Chairperson’s statement 2020 was Virgin Atlantic’s 36th year of continuous operation The 2020 financial year was a story of vastly reduced flying, The forecast that all UK adults aged over 18 will have been and the most difficult in the company’s history. Covid-19 ruined prodigious losses, financial restructuring to preserve liquidity, vaccinated by the end of July certainly underpins our optimism lives and devastated economies globally. Aviation has been one and operational restructuring to reduce our establishment in about reopening. Subject of course to that fundamental of the worst affected industries, and within aviation, the long- order to meet the new market environment. assumption, there are real grounds for optimism at haul sector, of which VAA is part, has been the most damaged. Virgin Atlantic. Passenger numbers and revenue fell by 80%. We carried 1.2 For more than 12 months now, we have been locked in a daily million passengers compared to nearly 6 million in the previous We have shown great agility in re-shaping the airline’s operations fight for survival. That we have come so far is due to the great year. Passenger revenue was £446m compared to over £2bn in and transforming the cost base. In 2022, we will make further qualities of leadership shown by our senior leadership team, led 2019. The only bright spot was the performance of our cargo progress towards our ambition to be the most loved travel by Shai Weiss, to the unstinting and brave contributions of all operation which grew revenue by nearly 50% to £319m, a company, while being sustainably profitable. our staff, and to the great support of our partners in business, remarkable achievement in the circumstances. who joined us in a successful and comprehensive solvent On behalf of the whole Board and of our shareholders, I can recapitalisation scheme in September last year. We are now Our response to the crisis involved consolidating flight safely say that the one truly bright aspect of an otherwise planning on the basis of a phased exit to the pandemic in the operations at Heathrow and Manchester, reducing our fleet and dreadful year in 2020 was the performance and commitment second half of the year and a return to profitable operation streamlining all areas of the company, which sadly also included of our people. Whether in work or on furlough, all pulled in 2022. a 41% reduction in our workforce by the end of 2020. together to support each other and the national effort to respond to Covid-19. There is much to celebrate in this prospect, but this celebration The sudden and prolonged restrictions imposed on travel in has to be tempered by our sorrow and great regret for the March 2020 created enormous logistical difficulties for all We worked with the Foreign and Commonwealth Office human cost of our fight for survival. Enormously hard decisions passenger carriers, as literally millions of ticketed passengers to repatriate UK citizens. We partnered with the Department have had to be taken to reduce operations and therefore make sought to re-arrange or cancel flights in a short period of time, of Health and the NHS to transport crucial medical supplies permanent headcount reductions, in order to survive. We are a a contingency for which no operational plan existed. to the UK, including 7,000 tonnes of PPE, test kits and other significantly diminished team as a result. Our thoughts are with medical supplies. those affected, and our great thanks are due to them for their We ourselves refunded 220,000 bookings with more than loyal service. £600m between January and December. As was the case Whilst on furlough, more than 350 cabin crew volunteered to for all operators, we were not able to process the requests work at NHS Nightingale and other hospitals, the ambulance At the end of February 2021, the UK Government published to the timescales normally in force, which we much regret. services and as NHS Volunteer Responders. Now, in the its roadmap to a progressive reopening of the economy and However, we did catch up in the shortest time achievable, due to vaccination phase, our frontline staff with medical training are removal of social restrictions. This roadmap underpins our own extraordinary efforts by the customer teams, and our procedures supporting the vaccine roll-out. plan to restart passenger services at scale in time for the second have been amended, to hopefully avoid a repetition of last half of the year. However, much remains to be done in terms of year’s problems. We also owe great thanks to all our partners in business, our planning to enable travel to resume fully. There are decisions to suppliers and our financiers. The support they have given our be taken about the requirements for Covid testing, passporting The first half of 2021 is all about the continuing fight for survival, efforts to get through the crisis has been outstanding. At Virgin and certification. as most long-haul routes remain closed. We continue to Atlantic, a core objective is to be “best in partnering”; I believe husband resources and to preserve cash. Following the roadmap that the deep trust evidenced by the support of all concerned in Virgin Atlantic is completely focused on delivering a safe, secure announcement on 22 February, we look forward to a second half our restructuring last September is a testament to the value of and healthy environment for our staff and customers, and we year of resumed operations at scale. There is even the prospect, our approach to business over the years. have been working hard to assist Government in formulating if the roadmap timetable is adhered to, of more substantial flight practical and effective measures to deliver this. We will know operations re-starting at the end of May. more in April and May, after the Government’s task force reports. 6 Virgin Atlantic Annual Report 2020 Virgin Atlantic Annual Report 2020 7 Chairperson’s statement continued Chairperson’s statement continued 2020 was a very difficult year for very many company boards, and ours was no exception. I thank all my Board colleagues for their great contribution. I also welcome Klaus Heinemann as independent Board Observer, on behalf of our creditors. Klaus has a wealth of aviation experience, having previously served as CEO of Aercap and as Chair of Finnair. During the year, Tom Mackay, our CFO, and Ian de Sousa, our Company Secretary of more than 20 years, stepped down. We give them our great thanks and very best wishes for the future. In conclusion, on behalf of the Board and shareholders, I give our most profound thanks and appreciation to every employee of Virgin Atlantic. This has been the hardest year for very many of us and our families, and the spirit and dedication you have displayed is remarkable. Survival depended on it. Through this dark period, the contribution of the leadership team and the inspiration they have given to us all has been amazing. Shai Weiss our CEO has epitomised the Virgin ethos. He has led by example and by sheer force of character and generosity of spirit, and Shai’s efforts have been matched by his colleagues in leadership. We cannot thank you all enough. Let’s all look forward to better times together, Covid-19 permitting. Peter Norris Recent awards Outdoor Virgin Atlantic was voted Britain’s only Global Five Star Airline by APEX – Airline Passenger Experience Association socialising for the fourth year running in the Official Airline Ratings.