Virgin America Reports Fourth Quarter and Full Year 2010 Financial Results

SAN FRANCISCO, April 21, 2011 /PRNewswire/ -- Virgin America today reported its financial results for the fourth quarter of 2010 and full year 2010.  Against the backdrop of higher fuel costs and the 2010 winter storms, the airline reported strong revenue performance with a 32 percent jump in revenue versus full year 2009.  The airline reported revenues of $191 million for the fourth quarter of 2010 and $724 million for full year 2010 – a year-over-year revenue increase of 25 percent and 32 percent respectively (on a 17 percent year-over-year increase in capacity for the full year).  For full year 2010, Virgin America reported a $12 million operating loss on revenues of $724 million — a 68 percent year-over-year improvement, and notable given that the airline's fuel costs also increased by $73 million for the same period due to higher fuel costs per gallon.  The airline reported a (1.7) percent operating margin for full year 2010.  As the airline continued to deliver significant growth, it reported industry-leading unit revenue performance (RASM) with a 16 percent improvement in RASM year-over-year for full year 2010.  The growing airline's stage-length adjusted guest unit revenue was also up 12 percent for the quarter and 20 percent for the full year.  In 2010, the company reported its first quarterly net profit in the third quarter.  Despite its revenue performance and its first quarterly net profit, the airline's full year 2010 results were lower than originally forecast primarily due to increased fuel costs, higher costs of growth and the impact of the East Coast storms.  

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

"As a young airline still fueling growth, we continue to move in the right direction with our top line progress and revenue results, especially given the backdrop of global recession and an unprecedented run-up in oil prices since our 2007 launch," said Virgin America President and CEO David Cush.  "For the last three years, our passenger unit revenue performance gains have surpassed industry performance.  With a loyal base of flyers, an unrivalled product and the best service team in the business, we're pleased with our company's trajectory in what was just our third year of operations."  

The airline grew its fleet from 28 aircraft to 34 aircraft during 2010.  The airline's yield per passenger mile for full year 2010 was 11 cents, up 16 percent compared to full year 2009.  Virgin America continues to hedge in order to help manage fuel price volatility.  The airline hedged 50 percent of its 2011 projected fuel requirements, with 77 percent of its first quarter 2011 requirements hedged at an average crude oil call strike price of $82 per barrel.  

Although a privately held company, Virgin America is announcing these earnings results in advance of the Department of Transportation's (DOT) quarterly reports.  

Full Year 2010 Reporting Highlights:

• Operating results:  The airline reported an operating loss of $12 million (a 68 percent improvement year-over-year).  This resulted in a (1.7) percent operating margin for the year (a 5.4 point improvement year-over-year).
• Load factors:  Revenue passenger miles increased 15 percent on a 17 percent increase in capacity, resulting in a 2010 load factor of 82 percent – a drop of 1.3 points year-over-year.
• Top line progress:  Revenue in 2010 was up 32 percent versus 2009.  RASM increased by 16 percent year-over-year.  The airline's stage-length adjusted guest unit revenue was up 20 percent versus 2009.  
• Cost control:  Operating expense per available seat mile excluding fuel (ex-fuel CASM) dropped 2 percent in 2010 even with investment to fuel growth (training, people and aircraft in modification), demonstrating the carrier's continued commitment to cost control.  
• Cash:  The airline ended 2010 with $30 million in unrestricted cash and $66 million in total liquidity.

Fourth Quarter Reporting Highlights:

• Operating results:  The airline reported an operating loss of $11 million in the fourth quarter.
• Load factors:  Revenue passenger miles increased 17 percent on an 18 percent increase in capacity, resulting in a fourth quarter load factor of 83 percent – a drop of 1 point year-over-year.
• Top line progress: Revenue in the fourth quarter was up 25 percent versus fourth quarter 2009.  RASM increased by 5 percent year-over-year.  Stage-length adjusted guest unit revenue was up 12 percent versus fourth quarter 2009.  
• Cost control:  Operating expense per available seat mile excluding fuel (ex-fuel CASM) increased by 2 percent in the quarter primarily from investment to fuel growth (training, people and aircraft in modification).  

"We're seeing strong revenue performance in 2011 and with industry capacity discipline we remain encouraged by the outlook.  Oil prices remain a concern and as a result we plan to tap the brakes slightly on our 2012 growth plans.  That said, as a new airline we're still continuing to grow overall and look forward to expanding our network in major business and leisure travel destinations like Chicago," added Cush.

Virgin America continued to experience significant growth in 2010.  In July, the airline announced it would place an order for 60 new Airbus A320 Family aircraft for delivery starting in 2013, ultimately including 30 of the A320neo aircraft – the first commercial order for the new eco-efficient engine option.  With that growth and growth from other sources, Virgin America's fleet will nearly triple in size – from its current 39 aircraft to 113 aircraft by 2019.  In October 2010, the airline launched new service to Orlando International Airport.  In December 2010, Virgin America launched new flights to Dallas-Fort Worth and Los Cabos. Since its 2007 launch, Virgin America has created 2,000 new jobs, welcomed more than 11 million guests and has swept the major reader-based travel awards.  As the only airline based in California, the airline's growth has helped make San Francisco International Airport (SFO) one of the nation's few growing airports.  This month, the airline became an anchor tenant at SFO's newly opened Terminal 2.

Although Virgin America does not yet meet the size threshold to be classified a "major" carrier by DOT, the airline tracks on-time performance, baggage handling and other operational statistics in advance of DOT's requirement to report.  For January-December 2010, the airline achieved an 83.9 percent cumulative A-14 on-time ranking, significantly higher than the industry average of 79.8 percent.  The airline's baggage handling rate for 2010 was 0.91 mishandled baggage reports per 1000 guests, which would have placed it first among all U.S. carriers for baggage reliability, when compared to DOT's reportable data for the same period.

In 2010, Virgin America continued its year-over-year sweep of the major travel awards, including:

• Best Domestic Airline in Travel + Leisure's World's Best Awards (third consecutive year win);
• Best Domestic Airline in Condé Nast Traveler's Readers' Choice Awards (third consecutive year win);
• Best in Class in the 2010 Zagat Global Airline Survey.  Virgin America received the highest overall score of any U.S. airline in the survey of over 8000 frequent flyers.  The airline also took top honors for the third consecutive year for best service in the "Midsize Domestic Premium Class" and "Midsize Domestic Economy Class" categories;
• Most Eco-friendly U.S. Airline in Greenopia's Annual Scorecard;
• Number one for guest experience and entertainment in 2010 APEX Passenger Choice Awards™;
• Best Business/First Class among U.S. airlines in Condé Nast Traveler's Business Travel Poll (third consecutive year win);
• Most Eco-Friendly Airline by Smarter Travel.

Other key milestones achieved in 2010 include:

• Announced one of the year's largest single fleet orders with the order of 60 new Airbus A320 Family aircraft;
• The airline continued to invest in its new home at SFO's Terminal 2. T2 is anticipated to become the first LEED® Gold-certified airport terminal in the U.S. – with Virgin America's spaces slated to achieve the highest possible LEED® Platinum-certification;
• New service launched to Orlando International Airport (MCO), Dallas-Fort Worth International Airport (DFW) and San Jose del Cabo International Airport (SJD);  
• Announcement of new service to Cancun International Airport (CUN);
• Launch of Virgin global frequent flyer partnership with Virgin Atlantic and V Australia/Virgin Blue;
• Upgrades to Red™ in-flight entertainment platform launched, including enhanced Google Maps, an open tab for the airline's on-demand menu and the first seatback in-flight digital Shop platform;
• In January, the airline closed on a new ownership structure, and the DOT affirmed the company's financial fitness and U.S. citizenship. This allowed the airline to re-enter the aircraft markets to fuel its growth;
• 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 continued to expand its interline partnerships;
• As the official airline of the hometown champion San Francisco Giants, the airline celebrated its third year anniversary at a special game at AT&T Park, with the City of San Francisco also declaring it "Virgin America Day" in San Francisco.

Virgin America flies to: San Francisco, Los Angeles, New York, Washington D.C., Seattle, Las Vegas, San Diego, Boston, Fort Lauderdale, Orlando, Dallas-Fort Worth, Los Cabos, Cancun, Mexico and beginning May 25, 2011 – Chicago.  

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 three years flying, Virgin America was named "Best Domestic Airline" in the Conde Nast Traveler 2008, 2009 and 2010 Readers' Choice Awards and "Best Domestic Airline" in Travel + Leisure's 2008, 2009 and 2010 World's Best Awards.  Virgin America is a U.S. owned and operated airline that has created 2,000 jobs and welcomed more than 11 million guests since its August 2007 launch.  The airline's current base of operations is SFO's International Terminal.  On April 14, 2011, the airline became an anchor tenant at SFO's new Terminal 2.  Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C., Seattle, Las Vegas, San Diego, Boston, Fort Lauderdale, Orlando, Dallas-Fort Worth, Los Cabos, Cancun and Chicago (as of May 25, 2011).  For more, please visit: www.virginamerica.com

SOURCE Virgin America