Virgin America Reports Second Quarter 2010 Financial Results

Airline Reports 36 Percent Increase in Revenue Year-Over-Year

Sep 10, 2010, 11:00 ET from Virgin America

SAN FRANCISCO, Sept. 10 /PRNewswire/ -- Virgin America today reported its financial results for the second quarter of 2010.  The airline reported record-setting performance for the quarter with revenues of $184 million – a 36 percent jump in revenue versus the second quarter of 2009.  Unit revenue (RASM) increased by 23 percent year-over-year.  As the airline continued to expand significantly, it broke even on an operating basis for the quarter – an improvement of 92 percent year-over-year.  Yield per passenger mile in the second quarter was 11 cents, up 28 percent compared to the second quarter of 2009. Adjusting for the non-cash unrealized losses on its fuel derivatives, the airline would have reported operating income of $10 million and a 5.6 percent operating margin for the quarter.  Virgin America continued to hedge in order to help manage fuel price volatility.  The airline has hedged 85 percent of its second half of 2010 projected fuel requirements at an average crude oil call strike price of $82 per barrel.  

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"Even with significant increases in fuel costs during the quarter, our top line progress continues to exceed our expectations as a young and growing airline. Despite the rough economic climate since our launch, we remain on track with our original projection of achieving a full year operating profit in 2010," said Virgin America President and CEO David Cush.  "With revenue up by over one-third year-over-year, an unrivalled product and an award-winning team, we're pleased with our Company's trajectory in what is just our third year of operations."

Second Quarter Reporting Highlights:

  • Operating results:  The airline reported a $430,000 operating loss, an improvement of 92 percent over the second quarter of 2009.  Adjusting for the non-cash unrealized losses on its fuel derivatives, Virgin America would have generated a $10 million operating profit for the quarter – an improvement of $23 million versus similarly adjusted operating results for the second quarter of 2009.
  • Load Factors:  Revenue passenger miles for the second quarter increased 10 percent on a 14% increase in capacity, resulting in a second quarter load factor of 82 percent – a drop of three points year-over-year.
  • Top line progress:  Revenue in the second quarter of 2010 was up by 36 percent versus the second quarter of 2009. RASM increased by 23 percent year-over-year.  The airline's stage-length adjusted guest unit revenue was up 29 percent versus the second quarter of 2009, a period in which the industry's unit revenue grew 16 percent.  
  • Cost control:  Virgin America's operating expense per available seat mile excluding fuel (Ex-fuel CASM) dropped by 6 percent, as the airline continued to increase capacity at a low marginal cost.
  • Cash:  The airline ended the second quarter of 2010 with $26 million in unrestricted cash and $100 million in total liquidity.

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

"We're encouraged by the exceptionally strong revenue environment in the third quarter.  With expansion to several new cities, including more international destinations – we're optimistic about the months ahead," added Cush.

Virgin America continues to experience significant growth with the addition of four new destinations in 2010 and one additional destination in January 2011. In July 2010, the growing airline placed one of the year's largest single aircraft orders at the Farnborough International Airshow – announcing plans to order 40 new aircraft.   The airline's fleet is projected to grow by two-thirds by the end of 2011 and will triple in size by 2016.  Since its 2007 launch, Virgin America has created 1,600 new jobs, welcomed more than nine million guests and has swept 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.

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 DOT's requirement to report.  For the second quarter of 2010, Virgin America achieved an 86 percent cumulative A-14 on-time ranking, which would have placed the carrier third among all U.S. reporting carriers for on-time performance during the quarter.  The airline also outperformed the majority of the industry with a 99.9 percent completion factor, which would have placed the carrier second among all U.S. carriers when compared to DOT's reportable data.  The airline's baggage handling rate for the second quarter was .82 mishandled baggage reports per 1000 guests (versus the industry average of 3.31), which would have placed it first among all U.S. carriers for baggage reliability, when compared to DOT's reportable data.  

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


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


Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C., Seattle, Las Vegas, San Diego, Boston, Fort Lauderdale, Toronto, Orlando (starting October 6, 2010), Dallas-Fort Worth (starting December 2010), Los Cabos (starting December 16, 2010) and Cancun (starting January 19, 2011).


Virgin America Inc.

Statements of Operations

(in thousands)



















Three months ended June 30,


Percent  




2010


2009


Change










OPERATING REVENUES








  Guest


$    167,684


$    119,280


40.6


  Other


16,764


16,645


0.7


Total operating revenues


184,448


135,925


35.7










OPERATING EXPENSES








  Aircraft fuel


70,168


31,291


124.2


  Aircraft rents


27,921


26,220


6.5


  Wages, salaries and related costs


26,053


21,670


20.2


  Aircraft maintenance


8,571


7,915


8.3


  Landing fees and other rents


16,193


15,181


6.7


  Sales and marketing


15,756


13,704


15.0


  Guest services and supplies


7,850


8,039


(2.3)


  Depreciation


2,410


4,400


(45.2)


  Other operating expenses


9,956


12,827


(22.4)


Total operating expenses


184,878


141,247


30.9










Operating income (loss)


(430)


(5,322)


91.9










Operating margin


(0.2%)


(3.9%)


3.7

pts









Other (income) expense


15,099


10,454


44.4










Net income (loss)


$    (15,529)


$    (15,776)


1.6










EBITDA


$        1,980


$          (922)


314.6


EBITDAR


$      29,901


$      25,298


18.2










Adjusted for unrealized (gains) losses on fuel derivatives:






EBITDAR


$      40,601


$      18,132


123.9


Operating income (loss)


$      10,270


$    (12,488)


182.2


Operating margin


5.6%


(9.2%)


14.8

pts





Virgin America Inc.

Statements of Operations

(in thousands)
















Six months ended June 30,


Percent



2010


2009


Change









OPERATING REVENUES







  Guest

$    299,715


$    209,610


43.0


  Other

31,533


27,104


16.3


Total operating revenues

331,248


236,714


39.9









OPERATING EXPENSES







  Aircraft fuel

124,673


56,401


121.0


  Aircraft rents

55,812


52,435


6.4


  Wages, salaries and related costs

53,312


42,711


24.8


  Aircraft maintenance

17,929


17,251


3.9


  Landing fees and other rents

32,577


29,430


10.7


  Sales and marketing

27,585


25,164


9.6


  Guest services and supplies

15,609


14,930


4.6


  Depreciation

5,627


8,902


(36.8)


  Other operating expenses

20,177


25,245


(20.1)


Total operating expenses

353,301


272,469


29.7









Operating income (loss)

(22,053)


(35,755)


38.3









Operating margin

(6.7%)


(15.1%)


8.4

pts








Other (income) expense

29,007


20,327


42.7









Net income (loss)

$    (51,060)


$    (56,081)


9.0









EBITDA

$    (16,426)


$    (26,853)


38.8


EBITDAR

$      39,386


$      25,582


54.0









Adjusted for unrealized (gains) losses on fuel derivatives:

EBITDAR

$      52,720


$      14,626


260.4


Operating income (loss)

$       (8,719)


$    (46,711)


81.3


Operating margin

(2.6%)


(19.7%)


17.1

pts



















Virgin America Inc.








Comparative Operating Statistics


















Three months ended June 30,


Percent




2010


2009


Change










Available seat miles (ASMs)(millions)


1,882


1,702


10.6


Scheduled ASMs (millions)


1,882


1,645


14.4


Average stage length (miles)


1,518


1,397


8.7


Aircraft in service


28


28


0.0


Fleet utilization (hours per day)


12.9


11.7


10.3










Guests


964,831


905,883


6.5


Scheduled revenue passenger miles (millions)


1,542


1,402


10.0


Load factor


81.9%


85.3%


(3.4)

pts

Average fare


$173.69


$131.58


32.0


Total revenue per available seat mile (cents)


9.80


7.99


22.7


Guest revenue per available seat mile (cents)


8.90


7.25


22.8


Yield per passenger mile (cents)


10.86


8.50


27.8










Cost per available seat mile (cents)


9.82


8.30


18.3


Cost per ASM, excluding fuel (cents)


6.09


6.46


(5.7)


Fuel cost per gallon (cents)


$2.80


$1.43


96.0


Fuel gallons consumed (thousands)


25,075


21,914


14.4


Teammates (FTEs)


1,581


1,455


8.7














Virgin America Inc.








Comparative Operating Statistics


















Six months ended June 30,


Percent




2010


2009


Change










Available seat miles (ASMs)(millions)


3,653


3,175


15.1


Scheduled ASMs (millions)


3,653


3,043


20.0


Average stage length (miles)


1,504


1,399


7.5


Aircraft in service


28


28


0.0


Fleet utilization (hours per day)


12.6


11.1


13.5










Guests


1,849,404


1,620,050


14.2


Scheduled revenue passenger miles (millions)


2,885


2,424


19.0


Load factor


79.0%


79.7%


(0.7)

pts

Average fare


$161.96


$129.30


25.3


Total revenue per available seat mile (cents)


9.07


7.46


21.6


Guest revenue per available seat mile (cents)


8.20


6.88


19.1


Yield per passenger mile (cents)


10.38


8.64


20.1










Cost per available seat mile (cents)


9.67


8.58


12.7


Cost per ASM, excluding fuel (cents)


6.26


6.80


(7.9)


Fuel cost per gallon (cents)


$2.58


$1.40


84.3


Fuel gallons consumed (thousands)


48,383


40,332


20.0





















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 financial 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 employs over 1600 people. The airline's base of operations is San Francisco International Airport.  Virgin America offers in-flight internet service on every flight and hosts the largest in-flight entertainment library in the North American skies via the Red™ platform.  In addition to a 30-film library including foreign language films and Hollywood blockbusters, Red offers live TV, games, seat-to-seat chat, 3,000 MP3s, Google maps, the world's first seatback digital Shop platform and more.  In just three years flying, Virgin America was named "Best Domestic Airline" in the Conde Nast Traveler 2008 and 2009 Readers' Choice Awards and "Best Domestic Airline" in Travel + Leisure's 2008, 2009 and 2010 World's Best Awards.  For photos and more: www.virginamerica.com

SOURCE Virgin America



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