Virgin Express Holdings PLC Announces Passenger Growth for 1st Quarter 2003

Paris, FRANCE


BELGIUM, May 27, 2003 (PRIMEZONE) -- Virgin Express Holdings PLC (Nasdaq:VIRGY) (Euronext Brussels:VIRE:)

Highlights

- Number of scheduled passengers grew by 9%, with load factors up to 80.6%.

- Destinations expanded to 18 major cities.

- Revenue per available seat kilometre down by 21% due to excess market capacity.

- Operating cost reduced by a further 9% to 6.42 EUR cents per available seat kilometre.

- Seasonal net loss of EUR 11.7 million.

Chairman's Statement

"During the first quarter of 2003 we have made significant progress by growing our customer base, our load factors and our share of major routes, all at a time when the industry is suffering from low demand and excess capacity. We have been able to do this by continuing to offer our customers high quality 'value for money' fares, combined with a tight control on costs. In line with my announcement of 26th March our seasonal losses for the first quarter were EUR 11.7 million versus EUR 6.7 million in the previous year. Global concerns about war and terrorism, together with Easter falling outside the Q1, have both contributed significantly to the greater quarterly loss this year as did the code share agreement with SN Brussels Airlines on a numberof key routes. This code share agreement has now been terminated.

"Our scheduled passenger numbers grew by 9% with load factors increasing to 80.6%. We now serve 18 destinations in Europe including new routes to Bordeaux and Palma de Mallorca and our on-time performance has been maintained at over 90% for the last eighteen months. This growth was achieved in a challenging trading environment in which the major operators have been discounting their ticket prices in order to stimulate the market and fill their excess capacity.

"The situation in the Brussels market has not been helped by SNBA adding 20% to their capacity by leasing in three A319 aircraft. Because of the over-capacity, and in spite of the growth in our passenger numbers, our revenue fell by 8%, with average revenue per ASK falling by 21%. We do not believe this situation can continue for long as our competitors are pricing well below their costs.

"We continue to keep our costs well under control. Fuel costs have risen in dollars, but this rise has been mitigated by a weak dollar, which has also helped reduce the aircraft lease and maintenance costs. Although production has increased by 17%, costs have risen by only 2%.Costs per ASK have been reduced by a further 9% to 6.42 EUR cents.

"On 16th May we announced that we were returning our Paris/Orly slots to the COHOR. Our allocation of slots would not allow us to build a scale operation to profitable destinations. Without a low cost base we would have been unable to offer the low fares the Paris marketdeserves. We will now re-focus our management attention on building our leadership position in Brussels.

"Our 2nd quarter has started well, although yields continue to be lower than originally planned as a result of continued price discounting in the market place. It is therefore difficult to project the outcome for the full year, as this will depend significantly upon the discounting policies of our competitors. However, we do not expect this situation to last long, because our major competitors are suffering huge losses and have poor cost positions. There can be no doubt that, before very long, unprofitable capacity will be forced out of the market.

"In order to strengthen our balance sheet, we announced in February 2003 that we were planning to raise EUR 35 million of new equity via a placement to Virgin Sky Investments Ltd, our major shareholder, with a claw back to IDR shareholders. This was agreed at an EGM held on 28th April 2003 and a prospectus will be distributed in June 2003. In addition, a new working capital facility of up to EUR 50 million will be put in place. With this new funding and the full support of our major shareholder, we have the financial strength to see us through the inevitable restructuring of the industry. We are confident that as long as we keep our costs and our fares low, and as long as we continue to offer the best service to our customers, then our airline will prosper."

Results for 1st Quarter

For the first quarter of 2003 the company reported an expected seasonal loss of EUR 11.7 million versus a loss of EUR 6.7 million in the first quarter of 2002.

Net income per IDS and ADS for the quarter are shown in the table below.



 Earnings per IDS and ADS
 Basic                              1Q 2003    1Q 2002  
 EUR per IDS                       E (2.42)   E (1.39)  
 USD per ADS                       $ (2.60)   $ (0.41)  
 Average Shares                   4,842,500  4,842,500  
 USD/EUR (Average) Exchange Rate      1.073      0.876  
 USD/EUR (Ending) Exchange Rate       1.090      0.872  

Revenues

Total revenues decreased 8% to EUR 41.7 million in the quarter ended 31st March 2003, compared to EUR 45.1 million a year ago. The decrease in total revenue was mainly due to the decrease in the ad hoc charter activity, the decrease in the number of subleased aircraft andEaster falling outside the 1st Quarter.

Despite the economic downturn, scheduled revenue has been successfully maintained by a raising of the load factor to 80.6% in comparison with last year's 75.8%. This significant change was brought about by the continuous improvement in our services, our on-time performanceand the expansion of our network of destinations.

Expenses

Total operating expenses increased by 2% to EUR 51.4 million for the quarter, compared to EUR 50.3 million in the same period the previous year. In 2003, the company continues to improve the process of cost control and succeeded in decreasing its system unit costs by 9% to6.42 Euro cents per ASK, despite the increase of several costs outside the company's control such as airport taxes, overflight charges and insurance costs.

With the exception of the historical factual information, the statements made in this press release constitute forward-lookingstatements under the safe harbour provisions of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are based on current expectations and involve certain assumptions, risks and uncertainties that could cause actual results to differ materially from those included or contemplated by the statements. The company disclaims any obligation to update any forward-looking statements as a result of developments occurring after the issuance of the press release.

A table of the quarterly result is attached.

Unaudited Results for the Three Months Ended March 31, 2002 and 2003.



                                           Three Months Ended
      (EUR Thousands)                              March 31,
                                             2002     2003     var  

 Revenue
 Scheduled                                  40,167    40,54      1%  

 Charter                                     2,163      163    -92%  

 Other                                        2.76      983    -64%  

 Total Revenue                              45,089   41,685     -8%  

 Operating Expenses
 Flight Operations                            3.99    4,026      1%  

 Aircraft Fuel                               4,999    6,161     23%  

 Navigation Fees                             3,248    4,538     40%  

 Maintenance                                 5,158    5,902     14% 

 Aircraft Ownership                         12,471    9,431    -24% 

 Station Operations                          8,418    8,379      0%  

 Passenger Services                          2,764    3,426     24%  

 Sales & Marketing                           4,878    4,877      0%  

 Depreciation & Amort.                         373      633     70%  

 General & Administrative                    4,028    4,046      0%  

 Total Operating Expenses                   50,325   51,416      2%  

 Operating Profit / (Loss)                  -5,235   -9,731     86%  

 Non Operating Income / (Loss)              -1,498   -1,981     32%  
 
 Profit / (Loss) before taxation and        -6,733  -11,712     74% 

  Tax and Minority interests                     1      -35  -3565%  

 Profit / (Loss) after taxation and

  Minority interests                        -6,732  -11,747     74%

 Operating Data   

 Scheduled Services (Euro cents/KM)   

 RPKs (000)                                479,294  629,697     31%  
 
 ASKs (000)                                632,348  781,531     24%  
 
 Load Factor                                 75.8%    80.6%    6.3%  

 Revenue per RPK                              8.38     6.44    -23%  

 Revenue per ASK                              6.35     5.19    -18%  

 Flights Flown                               4,961    4,602     -7%  

 Passengers Flown                          504,313  551,593      9%  

 Charter Services (Euro cents/KM)

 RPKs (000)                                 25,499    3,857    -85%  

 ASKs (000)                                  41.76    4,858    -88%  

 Flights Flown                                 184       18    -90%  

 Passengers Flown                           16,651    1,771    -89%  

 Block Hours Flown                             430       48    -89%  

 Total (Euro cents/KM)

 RPKs (000)                                 504,793  633,554     26%  

 ASKs (000)                                 674,108  786,389     17%  

 Revenue per RPK                               8.93     6.58    -26%  
 
 Revenue per ASK                               6.69     5.30    -21%  

 Flights Flown                                5,145     4.62    -10%  

 Ave. Flight Length                             901    1,178     31%  

 Passengers Flown                           520,964  553,364      6%  

 Block Hours Flown                            8,801    9,924     13%  

 Fuel Gallons (000)                           6,461     7,13     10%  

 Operating Cost/ASK (1)                        7.04     6.42     -9%  

 Ave Fuel Price (US cents per gallon)         65.83    92.10     40%  

 Ave Exchange Rate $/EUR                      0.876    1.073     23%

 Ending Exchange rate $/EUR                   0.872    1.090     25%  


        

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