Sir Richard Branson has lost none of his touch when it comes to public relations. News that Virgin Atlantic almost doubled full-year pre-tax profits, to £68.4 million, came less than 100 hours after British Airways reported a record loss of £401 million. To rub it in, Virgin also claimed that the profits increase had been achieved on the back of rising numbers of premium passengers, a decline in which was blamed for BA’s poor results.

As ever with Sir Richard, though, one needs to look beyond the press release. Since Virgin Atlantic is a private company, it enjoys the luxury of limited disclosure, so tells us only what it wants. These numbers have, curiously, been released a full two months earlier than Virgin Atlantic’s annual results last year. That raises the suspicion that their release has been timed not only to embarrass the old enemy but also to emphasise the airline’s strength to the trade at a time when the battle for corporate clients is more ferocious than ever.

As for that apparent increase in profits, there is also cause for scepticism. The figure being quoted this year, £68.4 million, does not include any exceptional items. The figure quoted for last year, £34.8 million, is a post-exceptional figure which took into account the £32.5 million provision Virgin Atlantic set aside to cover potential losses resulting from its collusion with BA to fix fuel surcharges for long-haul flights. The more meaningful figure for last year was actually £60.9 million and is, therefore, indicative of a much less dramatic improvement than Virgin Atlantic would have you believe.

The chances are that, rather than a dramatic increase in premium rate traffic, much of this profits increase has actually been achieved by cutting costs — such as the decision to axe the popular in-flight beauty service for Upper Class passengers.

In the airline’s favour, it has evidently got its hedging policy on fuel right during the past 12 months, something that BA and others, including Ryanair, have palpably failed to do. The management of the fuel bill is all the more significant an achievement in view of the make-up of the airline’s fleet, which is by no means the most fuel-efficient in the skies at present.

Virgin Atlantic is also at an advantage to some rivals, including BA, in that staffing costs — which, even more than fuel, are the biggest overhead for any airline — are somewhat lower because it pays its cabin crews less. Costs are likely to come under further pressure this year since, three months ago, the airline said that it was cutting up to 600 jobs — or at least 7 per cent of its workforce. It is understood that about a third of these posts are likely to be among cabin crew.

As for the next 12 months, it is difficult to assess Virgin Atlantic’s prospects in detail, given the lack of a balance sheet to analyse. However, the admission by Steve Ridgway, the chief executive, that none of the world’s big airlines would make a profit in the current financial year is probably more meaningful than a set of accounts.

Virgin Atlantic celebrates its 25th anniversary on June 22 — a fantastic achievement for what, despite the publicity, remains a niche operator. Whether it will still be around 25 years from now is another matter altogether.

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