TWO businesses hit by the fall out from the September 11 terrorist attacks on the US have reported contrasting fortunes in the first three months of the year.

While Sir Richard Branson's Virgin Atlantic made its first quarterly profit since the attacks, Hotels group Hilton reported a 14 per cent slide in its profits.

Virgin Atlantic generated profits of £5m in the three months to April 30, seen as yet another indication that the airline market is picking up.

Virgin has announced plans to create about 300 jobs thanks to increased passenger traffic.

The fall out from the attacks saw Virgin cut back the size of its business by about 20 per cent, with staff numbers reduced by 1,900 worldwide.

Virgin said yesterday that losses for the 12 months to April 30 would be about £90m, compared with profits of £45m a year ago.

Sir Richard said the recovery in the final quarter reflected the "hard work and dedication" of the airline's workforce.

"After September 11 we moved more quickly and decisively than our rivals to restructure the airline to match the new demands of the market place," he said.

"It's a tremendous achievement to register a trading profit in the past three months after the terrible challenges the airline faced last year."

The average proportion of seats occupied on each flight has increased from between 80 and 85 per cent to 85 and 90 per cent.

Virgin has offered cut-price fares to New York in recent months following its offer of a return ticket to the US for £98 in November and December.

A spokesman said passenger numbers were down by about six per cent on last year, a significant improvement on the 15 to 20 per cent drop after September 11.

Hilton, meanwhile, told shareholders at its annual general meeting that pre-tax profits in the three months to April 30 fell 14 per cent, compared with the same period last year.

Its hotels throughout Europe had seen recovery slow during March and April.

Its Ladbrokes gaming division fared better, performing strongly during the period, helped by the abolition last year of betting duty, and turnover soared 55 per cent in its UK betting shops.