Virgin Atlantic Airways said yesterday a tight rein on costs had helped it swing into profit in the last financial year, but cautioned it was difficult to predict how it would fare this year.

The airline, led by Sir Richard Branson, said it expected to have made a pre-tax profit of £10 million (€14.3 million) during the year to end-April 2003 compared with a £92 million loss a year earlier.

Virgin's turnaround comes at a time when the airline sector struggled with high oil prices, the war in Iraq and the spread of the deadly SARS virus in Asia.

"In the current climate it's very difficult to predict what the next 12 months will bring, but we're hopeful that we will remain in profit," Mr Branson said. Virgin said the challenging conditions engulfing the airline industry had hit last year's revenues, which fell to around £1.4 billion from £1.5 billion a year earlier. But passenger numbers were unchanged at around four million people.

The airline, 51 per cent owned by Branson's Virgin group and the rest by Singapore Airlines, said it was continuing to invest in new planes, with three Airbus 340-600 and a Boeing 747-400 aircraft expected to join its 26-strong fleet this year.

Sir Richard, who has expressed interest in taking over the fleet of Concordes which British Airways plans to retire later this year, said it was his "strong personal ambition" to keep the supersonic jetliners flying in Virgin's colours.

British Airways has rejected Virgin's offer to buy its Concorde fleet, saying it would prefer to donate the planes to museums. - (Reuters)