Virgin America Reports Second Quarter 2012 Financial Results Airline Reports 29 Percent Increase in Operating Revenues and Improved Operating, EBITDAR margins

SAN FRANCISCO, Sept. 24, 2012 /PRNewswire/ -- Virgin America today reported its financial results for the second quarter of 2012.  Total operating revenue for the second quarter grew by 29 percent to $347 million on a capacity increase of 32 percent.  The Company narrowed its operating loss to $4 million for the second quarter, and improved earnings before interest, depreciation and amortization, and aircraft rental expense (EBITDAR) by 44 percent, to a record high of $54 million.  EBITDAR margin for the second quarter rose to 16 percent, a 1.7 point year-over-year improvement.  Year-to-date Virgin America reported total revenue of $614 million – a 31 percent increase year-over-year.  Operating loss for the six months ended June 30, 2012, was $53 million.  Year-to-date the Company has achieved EBITDAR of $61 million, an improvement of 23 percent over the first six months of 2011.

(Logo: http://photos.prnewswire.com/prnh/20090123/VIRGINAMERICALOGO)

In the second year of an unprecedented capacity growth cycle, Virgin America's unit revenue (RASM) declined a modest 2 percent as compared to the second quarter of 2011.  Over the past two years, the airline has increased available seat miles (ASM) by 72 percent with an 11 percent increase in RASM.  The Company took delivery of one aircraft during the second quarter, ending the quarter with a total fleet of 52 Airbus A320 Family aircraft.   The airline has taken delivery of 24 aircraft total since the first quarter of 2010.  This rapid growth established Virgin America's core network and provided an important base for the carrier's future success.  This phase of accelerated growth is now largely complete, as Virgin America will take delivery of just one additional aircraft through the second quarter of 2013.

Cost per available seat mile (CASM) excluding fuel decreased by 1.5 percent, despite the cost pressures of growth, reflecting the benefits of economies of scale that Virgin America will see as growth slows.  Fuel costs during the quarter averaged $3.40 per gallon – a decrease of 3.4 percent year-over-year, although the quarter was still one of the highest cost periods in Virgin America's history.   Virgin America maintains a hedging program to manage the volatility of fuel prices and provide some protection from short-term price increases.  As of June 30, the Company has hedged 58 percent of its expected fuel consumption for the rest of 2012, and 30 percent for the first half of 2013.

"With improved margins in the second quarter, our investment in building our network over the past two years is beginning to pay off," said Virgin America President and CEO David Cush. "Despite the economic climate and the historic rise in fuel costs faced since our launch, as a new carrier we needed to grow.  After two years of record expansion, we're pleased to have built a strong foundation and to have delivered on our promise of offering the best product in the domestic skies.  With just one aircraft delivery in the next twelve months, we will focus on maximizing the value of our network instead of managing additional growth.  As we enter this period of slower growth, we expect the investment in our core network to continue to provide improved financial results."

In the 12 months ending in June 2012, Virgin America launched new service to Puerto Vallarta, Palm Springs, Philadelphia, and Portland.  Since its 2007 launch, the airline has created 2,600 new jobs, expanded to 19 airport destinations, signed up 2.5 million Elevate® members and swept the reader-based travel awards, including "Best Domestic Airline" in Conde Nast Traveler's Readers' Choice Awards and Travel + Leisure's World's Best Awards.   As one of the few expanding U.S. airlines, Virgin America grew by 513 teammates year-over-year for the quarter.

Top Line Second Quarter Reporting Highlights:

  • Operating results:  The airline reported an operating loss of $4 million in the second quarter on revenues of $347 million – a 32 percent improvement year-over-year.
  • Load factor:  Revenue passenger miles increased 27 percent on a 32 percent increase in capacity, resulting in a second quarter load factor of 80 percent – a three point load factor decrease for the quarter year-over-year.
  • Top line progress:  Revenue in the second quarter was up 29 percent versus second quarter 2011.  RASM decreased by two percent year-over-year.
  • Cost control:  Operating expense per available seat mile excluding fuel (ex-fuel CASM) decreased by 2 percent in the quarter, reflecting the economies of scale from the Company's growth over the past year.
  • Cash:  The airline ended the quarter with $82 million in unrestricted cash.

This year, Virgin America reached the threshold to be classified a major carrier for reporting purposes by the U.S. Department of Transportation (DOT) and as such began reporting its on-time performance, baggage handling and other key operational statistics to the DOT monthly.  For the second quarter of 2012, Virgin America achieved an 85.2 percent cumulative on-time performance, placing the carrier seventh for on-time performance among all reporting major U.S. carriers for the quarter.  The airline's baggage handling rate for the first six months of 2012 was 0.88 mishandled baggage reports per 1000 guests, which placed it first among all reporting U.S. carriers for baggage reliability for the first half of 2012.

Key milestones achieved in the second quarter of 2012 include:

Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C. (IAD and DCA), Seattle, Las Vegas, San Diego, Boston, Fort Lauderdale, Orlando, Dallas-Fort Worth, Los Cabos, Cancun, Chicago, Puerto Vallarta, Palm Springs (seasonally), Philadelphia and Portland.

Although a privately held company, Virgin America is announcing these earnings results in advance of the DOT quarterly reports.

 

Virgin America Inc.

Consolidated Statement of Operations

For the Three and Six Months Ended June 30, 2012 and 2011

(unaudited, in thousands)





















3 Months Ended June 30,


Percent


6 Months Ended June 30,


Percent







2012


2011


Change


2012


2011


Change













(unaudited)



Operating revenues: 














Guest




$         319,443


$           247,125


29


$         560,317


$           430,327


30


Other




27,896


21,416


30


54,060


39,347


37

Total operating revenues


347,339


268,541


29


614,377


469,674


31


















Operating expenses:














Aircraft fuel


141,291


113,290


25


263,826


196,644


34


Aircraft rent


55,722


41,798


33


108,248


80,227


35


Salaries, wages and benefits


44,266


33,893


31


85,753


66,239


29


Landing fees and other rents


27,181


21,336


27


52,814


40,924


29


Sales and marketing


30,011


22,867


31


52,741


40,913


29


Maintenance


19,692


13,261


48


37,395


26,223


43


Guest services and supplies


12,456


10,838


15


24,303


19,969


22


Depreciation


2,726


1,863


46


5,272


4,790


10


Other operating expenses


18,072


15,396


17


36,693


29,236


26

Total operating expense


351,417


274,542


28


667,045


505,165


32


















Operating loss


(4,078)


(6,001)


32


(52,668)


(35,491)


(48)


















Other expense, net


27,677


15,698


76


55,099


30,783


79


















Net loss 




$          (31,755)


$           (21,699)


(46)


$        (107,767)


$           (66,274)


(63)



































EBITDAR



54,370


37,660


44


60,852


49,526


23

 

 

Virgin America Inc.

Comparative Operating Statistics


























3 months ended June 30


Percent



6 months ended June 30


Percent



2012


2011


Change



2012


2011


Change
















Available seat miles (ASMs)(millions)


3,238


2,449


32.2



6,063


4,622


31.2


Departures


14,414


11,176


29.0



27,169


20,958


29.6


Average stage length (miles)


1,582


1,563


1.2



1,574


1,576


(0.1)


Aircraft in service (average)


51


38


34.2



49


37


32.4


Fleet utilization (blk hours per ac day)


12.7


12.7


-



12.6


12.7


(0.8)

















Guests


1,601,275


1,281,844


24.9



3,029,164


2,285,937


32.5


Average fare 


$199.49


$192.79


3.5



$184.97


$188.25


(1.7)


Yield per passenger mile (cents)


12.38 ¢


12.17 ¢


1.7



11.56 ¢


11.71 ¢


(1.3)


Scheduled revenue passenger miles (millions)


2,580


2,030


27.1



4,846


3,676


31.8


Load factor


79.7%


82.9%


(3.2)

pts


80.1%


79.5%


0.6

pts

Guest revenue per available seat mile (cents)


9.87 ¢


10.09 ¢


(2.2)



9.26 ¢


9.31 ¢


(0.5)


Total revenue per available seat mile (cents)


10.73 ¢


10.97 ¢


(2.2)



10.13 ¢


10.16 ¢


(0.3)


















Cost per available seat mile - CASM (cents)


10.85 ¢


11.21 ¢


(3.2)



11.00 ¢


10.93 ¢


0.6


Cost per ASM, excluding fuel (cents)


6.49 ¢


6.59 ¢


(1.5)



6.65 ¢


6.67 ¢


(0.3)


Fuel cost per gallon


$3.40


$3.52


(3.4)



$3.37


$3.25


3.7


Fuel gallons consumed (thousands)


41,587


32,192


29.2



78,178


60,530


29.2


Teammates (FTEs)


2,427


1,914


26.8



2,358


1,865


26.5


 

About Virgin America:  Headquartered in California, Virgin America offers guests attractive fares and a host of innovative features aimed at reinventing air travel.  In just over five years flying, Virgin America was named "Best Domestic Airline" in the Conde Nast Traveler 2008, 2009, 2010  and 2011 'Readers' Choice' Awards and "Best Domestic Airline" in Travel + Leisure's 2008, 2009, 2010, 2011 and 2012 'World's Best' Awards.  The airline's base of operations is San Francisco International Airport (SFO)'s sleek and sustainable new Terminal 2.   The airline's new aircraft offer interactive in-flight entertainment systems and power outlets near every seat.  Virgin America offers Gogo™ WiFi on every flight and hosts the largest in-flight entertainment library in the North American skies via the touch-screen Red™ platform.  For more: www.virginamerica.com

SOURCE Virgin America



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