Virgin America Reports First Quarter 2010 Financial Results

SAN FRANCISCO, June 24 /PRNewswire/ -- Virgin America today reported its financial results for the first quarter of 2010.  Against the backdrop of higher fuel costs, the airline reported record-setting revenue performance -- with a 46 percent jump in revenue versus the first quarter of 2009. Unit revenue (RASM) increased by 21 percent year-over-year.  The airline reported a $22 million operating loss on revenues of $147 million during the quarter.  Virgin America narrowed its operating loss by $9 million year-over-year in the first quarter, improving its operating margin by 15.5 points.

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"Despite the near doubling of fuel costs during the quarter, our top line progress continues to exceed our expectations and we remain on track for full year operating profit in 2010," said Virgin America President and CEO David Cush.  "With a revenue increase of nearly fifty percent year-over-year and a unique service that is continuing to hit the mark with consumers, we're pleased with our results.  Our progress is a testament to our business model, the growing loyalty of our guests and the dedication of our entrepreneurial team."

First Quarter Reporting Highlights:

• Operating results:  The airline reported a $22 million operating loss, an improvement of 29 percent over the first quarter of 2009.  Had fuel prices remained constant year-over-year, Virgin America would have generated an operating profit in the first quarter of 2010.  
• Strong load factors:  The airline reported a 76 percent load factor in the first quarter of 2010 – a 3.8 point improvement over the first quarter of 2009, despite a 27 percent increase in scheduled service capacity.  
• Significant top line progress:  Revenue in the first quarter of 2010 was up by 46 percent versus the first quarter of 2009. Unit revenue (RASM) increased by 21 percent year-over-year.  Virgin America's stage-length adjusted guest unit revenue was up 20 percent versus the first quarter of 2009, a period in which the industry's unit revenue grew 10 percent.  With its industry-leading Red in-flight entertainment platform and fleetwide WiFi, the airline continued to see significant growth in its other revenue streams -- reporting revenue growth in this area of 41 percent year-over-year.
• Exceptional cost control:  Ex-fuel CASM dropped by 11 percent, as the airline continued to increase capacity at a very low marginal cost.
• Cash:  The airline ended the first quarter of 2010 with $28 million in unrestricted cash and $102 million in total liquidity.

The airline has also seen significant increases in traffic, bookings and average fares in the second quarter of 2010, in line with the overall positive trends for the industry.  The airline will release its second quarter results later this summer.  Although a privately held company, Virgin America is announcing these first quarter earnings results in advance of the Department of Transportation's (DOT) quarterly reports.

Virgin America is poised for major growth with the addition of five new destinations in 2010 (including Orlando and Toronto).  By the end of the first quarter of 2011, the airline's fleet is planned to grow by one-third -- with two-thirds fleet growth projected by the end of 2011. Since its 2007 launch, Virgin America has experienced record-setting growth -- with 1,600 new jobs created, more than eight million guests flown and a sweep of the major reader-based travel awards, including "Best Airline" in both Conde Nast Traveler's Readers' Choice Awards and Travel + Leisure's  World's Best Awards.  As the only airline based in San Francisco, the airline's growth has helped make San Francisco International Airport (SFO) one of the nation's few growing airports.  In spring of 2011, the airline will become one of two anchor tenants at SFO's new Terminal Two.

"We're optimistic about the improving revenue environment and look forward to expanding to five new destinations in 2010 and creating over 500 additional new jobs a year as we grow," added Cush.

While fuel prices increased 72 percent, Virgin America continued to hedge to help manage fuel price volatility.  The airline hedged 70 percent of its fuel consumption during the quarter.  Virgin America has hedged 85 percent of its remaining 2010 projected fuel requirements at an average crude call strike of $85 a barrel.  

Although Virgin America does not yet meet the size threshold to be classified a "major" carrier by DOT, the airline tracks its on-time performance, baggage handling and other key operational statistics in advance of the DOT's requirement to report.  For the first quarter of 2010, Virgin America achieved an 83.4 percent cumulative A-14 on-time ranking, which placed the carrier third for on-time performance among all U.S. carriers for the quarter.  Virgin America also outperformed the majority of the industry with a 99.1 percent completion factor, which placed the carrier fourth among all U.S. carriers when compared to the DOT's reportable data.  The airline's baggage handling rate for the first quarter was 1.05 mishandled baggage reports per 1000 guests, which placed it first among all U.S. carriers for reliability in the first quarter, when compared to DOT's reportable data.  

In the first quarter of 2010, Virgin America continued to win awards for its service and sustainability record, including:

• Most Eco-Friendly Airline in the SmarterTravel Editors' Choice Awards;
• Most Eco-friendly U.S. Airline in Greenopia's Annual Scorecard;
• Best Low-Cost Airline in North America in the 2010 Skytrax World Airline Awards.

Other key accomplishments achieved during the first quarter of 2010 include:

• In January, the airline closed on a new ownership structure, and the DOT affirmed the Company's financial fitness and U.S. citizenship status.  The new structure allowed the airline to re-enter the aircraft markets to fuel growth in 2010 and beyond;
• In February, the airline launched a new virginamerica.com site with greater functionality, speed and usability as well as new travel tools like "Express check-in";
• The airline signed a frequent flyer partnership with V Australia and Virgin Blue, improved Elevate member redemption (no points expiration), and added a new Elevate partner -- Morgans Hotel Group;
• The airline continued to expand its airline partnerships by signing its fourth interline agreement with Qatar Airways.

Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C., Seattle, Las Vegas, San Diego, Boston, Fort Lauderdale, Toronto (starting June 23) and Orlando (starting fourth quarter 2010).  

EDITORS NOTES:  Virgin America is a U.S.-controlled, owned and operated airline.  It is an entirely separate company from Virgin Atlantic.  Sir Richard Branson's Virgin Group is a minority share investor in Virgin America.

The Company previously released its quarterly results as submitted to the Department of Transportation.  Beginning in 2010, its quarterly financial statements will be presented consistent with its competitors.

About Virgin America:  Headquartered in California and launched in August 2007, Virgin America is one of the fastest growing start-up U.S. airlines of all time and currently employs over 1600 people.  Virgin America offers guests attractive fares and a host of innovative features aimed at reinventing air travel.  The airline's base of operations is San Francisco International Airport's modern International Terminal.  The airline's new aircraft offer interactive in-flight entertainment systems and power outlets near every seat for electronic gear.  Virgin America offers in-flight internet service on every flight and hosts the largest in-flight entertainment library in the North American skies via its touch-screen Red™ seatback system.  In just 2 1/2 years flying, the airline was named "Best Domestic Airline" in Conde Nast Traveler's 2008 and 2009 Readers' Choice Awards and Travel + Leisure's  2008 and 2009 World's Best Awards.  For more please visit:  www.virginamerica.com

SOURCE Virgin America