Virgin Atlantic back in the black: Virgin Atlantic Airways, the airline effectively put up for sale by Sir Richard Branson, warned of a bumpier ride ahead as it reversed £132m of losses to post a £18.5m pre-tax profit last year.

The carrier, which hired Deutsche Bank in November last year to review its options, said profits would have been higher still but for a £40m hit from the Icelandic volcano and the snow that paralysed Heathrow.

Revenues for the 12 months to the end of February rose 13pc to £2.7bn.

Steve Ridgway, chief executive, said the figures showed "the resilience of our business by weathering the toughest economic period for aviation" but cautioned that "a sharp recovery in the first half has been tempered" recently by more "challenging trading".

"We have seen more capacity and new routes, consumer confidence flatlining and higher fuel prices," he said, adding that jumpy financial markets and riots in London did not help.

"We don't want any reason for people not to come to the UK."

Deutsche began its review as British Airways sealed its merger with Spain's Iberia – a move that highlighted Virgin's relative small size and the fact that it does not belong to any of the three aviation alliances.

The SkyTeam combine led by Air France and Delta and the Lufthansa-led Star Alliance have both looked at Virgin, as have Gulf carriers including Etihad.

But talks are complicated by Singapore Airline's 49pc stake, bought for a pricey £600m in 1999. Mr Ridgway said "there's nothing happening right now" with any takeover discussions.

He preferred to focus on Virgin's planned £100m investment in improved in-flight entertainment, better connectivity for such things as iPads and upgraded airport lounges as the carrier prepares to take delivery of eight of 10 new Airbus A330s by the end of next year. Virgin plans to create 1,000 jobs.

Mr Ridgway reiterated his complaints over the rises in Air Passenger Duty which were hurting leisure flights, particularly to the Caribbean.

Source:  http://www.telegraph.co.uk