Virgin America Reports Second Quarter 2010 Financial Results

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:

• Most Eco-Friendly Airline in the SmarterTravel Editors' Choice Awards;

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

• Expansion to the airline's first international destination of Toronto;
• Launch of a frequent flyer partnership with V Australia and Virgin Blue;
• Elevate frequent flyers gained more ways to earn and redeem rewards, via a partnership with Points.com;
• The airline continues to invest in its new home at SFO's new Terminal 2. The $383 million project is anticipated to achieve Silver LEED Certification. When completed in 2011, the terminal will serve as the airline's principle base of operations.  

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).

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