Airlines still hitting turbulence as Virgin dives to £90m loss

The airline industry suffered further turbulence yesterday as Virgin Atlantic plunged to a £90m loss for the year as a result of the 11 September terrorist attacks.

Meanwhile, EADS, the aerospace and defence company which controls Airbus, said orders for its aircraft collapsed in the first quarter of the year. Separately, US Airways warned it was seeking a $1bn government aid package as part of a restructuring plan designed to stave off collapse.

However, Virgin Atlantic and EADS suggested that demand was improving. Despite its full-year loss for the year to April, which, compared with a profit of £45m a year earlier, Virgin Atlantic hinted that trading was showing signs of a recovery. The airline, which grounded planes and cut jobs in a bid to cut costs after last Autumn's terrorist attacks, reported a £5m trading profit in the final three months of the current year.

"After 11 September we moved more quickly and decisively than our rivals to restructure the airline to match the new demands of the market place," Sir Richard Branson, the chairman of Virgin Atlantic, said.

EADS painted a similar picture yesterday, saying its 80 per cent-owned Airbus division won orders for just 15 new planes, worth €1.3bn (£828m), in the first quarter to the end of March – down from the €16.9bn of orders in the same period a year ago.

It said, however, it had seen the early signs of a recovery in April with Airbus receiving 22 orders during that month. In addition, it said four airlines had recently announced plans to order more than 100 Airbus aircraft "in the near future". In the first quarter, underlying profits at the Airbus division fell to €396m from €427m in the same three months a year earlier, on flat revenues of €4.6bn.

Analysts hope British Airways will point to a similar recovery on Monday, when it releases its full-year figures. The UK airline, which has also slashed costs over the past six months, is forecast to have recorded a loss of £400m to £450m for the year.

US Airways, meanwhile, is set to ask staff to agree to lower pay and benefits as part of an exercise to cut its annual costs and ensure the carrier stays in business.

The Virginia-based carrier is looking to reduce annual costs by as much as $1.3bn, the bulk of which is expected to come from a reduction in staff costs.