Virgin Atlantic has blamed the rise in Air Passenger Duty for its inability to make a profit this year.
Reporting its annual accounts for the year ending February 29, the airline said economic uncertainty and "sky high" fuel prices had also taken their toll on its financial performance.
Although revenues increased by 3% to £2.74 billion and passenger numbers increased by 2% to 5.4 million, the group reported a pre-tax group operating loss of £80.2 million.
It said this was due to a 25% rise in APD collection to £195 million and a 32% climb in fuel unit cost before hedging.
The airline is implementing an efficiency drive to reduce operating costs by £50 million but said this was unlikely to mean job cuts.
Chief executive Steve Ridgway said: "In an incredibly challenging market, we have managed to grow top line revenues and fly more customers than last year.
"However, with the prevailing uncertainty in the economy, sky high fuel prices and a 25% hike in our air passenger duty fees, converting this sales growth into profit has not been possible."
Giving its outlook for this financial year, Virgin said airline revenues were up 5.8% to £481.9 million in the first quarter and passenger numbers up 2.3% to 1.3 million.
by Bev Fearis
