Virgin America Reports Third Quarter 2011 Financial Results

Airline Reports 44 Percent Increase in Operating Revenues

Closes Debt Facility of $150 million and Secures PDP Financing for 20 New Aircraft

News provided by

Virgin America

Dec 21, 2011, 10:00 ET

SAN FRANCISCO, Dec. 21, 2011 /PRNewswire/ -- Virgin America today reports its financial results for the third quarter of 2011.  During a period of significantly higher fuel prices, Virgin America reports a $16.2 million operating profit for the quarter, resulting in a 6 percent operating margin.  The airline achieved strong revenue growth, with a 44 percent increase in operating revenue as compared to the third quarter of 2010.  The airline's revenue per available seat mile (RASM) improved by 9 percent year-over-year, on a 32 percent increase in capacity.  Excluding new routes added in the past 12 months, RASM in the carrier's established markets improved by 17 percent year-over-year.  However, total fuel costs for the quarter increased by 86 percent and the Company's average price per gallon of fuel increased by 43 percent year-over-year.  The increase in fuel costs was the primary factor in a $4.8 million decrease in Virgin America's operating income, as compared to the third quarter of 2010.

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

Today, Virgin America also reports it has raised an additional $150 million in a new four and a half year debt facility funded in December, further improving the Company's cash position.  The Company has also obtained lease financing commitments for 13 Airbus A320 Family aircraft slated for delivery between October 2011 and September 2013.  In addition, the Company has closed on a financing facility for the majority of its pre-delivery payment obligations ("PDPs") due on the first 20 aircraft within its order of 60 Airbus A320s, scheduled to begin delivery in the summer of 2013.  In January 2011, Virgin America announced a major fleet order, which included the first commercial order for the new Airbus A320 neo aircraft.

"We're pleased to announce this additional $150 million debt offering, which demonstrates confidence in our outlook and business model.  This increase in liquidity supports our long-term vision and growth plans for Virgin America.  In addition, we have fully funded our aircraft capital requirements through the third quarter of 2013," said Virgin America President and CEO David Cush. 

Fuel prices remained a challenge for Virgin America and the overall domestic industry during the third quarter of 2011.  Had fuel prices remained flat year-over-year, Virgin America's operating profit would have been $33 million higher in the third quarter. 

"Although higher oil costs weighed on our overall financial performance for the quarter, as a young airline still fueling growth, we're pleased to see continued strong revenue performance and to have achieved an operating profit for the quarter.  With financing to fund our growth through 2013, an unrivaled product and the cost leverage we continue to gain with size – we're primed for strong performance in 2012 and beyond," added Cush.

Non-fuel cost per available seat mile (CASM) increased by 2 percent over the year earlier quarter, as the carrier continued to invest in its teammates, new aircraft and infrastructure to support its growth.  As compared to the third quarter of 2010, Virgin America increased its average aircraft in revenue service by 39 percent – or by 11 aircraft.  In addition, during the quarter the Company added the full-time-equivalent of 367 teammates, incurring the associated recruiting and training costs as the carrier continues to expand.  As one of the few U.S. airlines creating new jobs, the total number of teammates grew by 22 percent (or 367 full-time equivalent teammates) as compared to the third quarter of 2010.

Third Quarter 2011 Reporting Highlights:

  • Operating results: The airline reported a $16.2 million operating profit in the third quarter and a $3.3 million net loss.  The airline's yield per passenger mile was 12.3 cents, up 10 percent compared to the third quarter of 2010.
  • Load factors: The airline reported an 84.2 percent load factor in the third quarter, on a 32 percent increase in scheduled service capacity over the year earlier quarter – compared to an industry average capacity which remained flat.
  • Top line progress: RASM increased 9 percent over the third quarter of 2010.  Virgin America's average fare increased 5 percent over the prior year.
  • Cost control: Operating expense per available seat mile excluding fuel (ex-fuel CASM) increased by 2 percent versus third quarter 2010, primarily as a result of investment in the Company's growth (training, people and aircraft in modification).
  • Cash:  The airline ended the quarter with $24 million in unrestricted cash and $42 million in total liquidity.  This excludes the latest debt facility, which closed in December 2011.

Although Virgin America does not yet meet the size threshold to be classified a "major" carrier by DOT, it will be classified as one in 2012.  In the interim, 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 third quarter of 2011, Virgin America achieved an 83.1 percent cumulative A-14 on-time ranking.  Virgin America also reported a 99.2% percent completion factor for the quarter.  The airline's baggage handling rate for the third quarter was .78 mishandled baggage reports per 1000 guests, which would place it first among all reporting U.S. carriers for reliability in the third quarter, when compared to DOT's reportable data. 

Since its 2007 launch, Virgin America has experienced record-setting growth – with 2,200 new jobs created, more than 14 million guests flown and a sweep of the major reader-based travel awards, including "Best Domestic Airline" in both Condé Nast Traveler's Readers' Choice Awards and Travel + Leisure's World's Best Awards.  As one of the few growing U.S. airlines, Virgin America continues to expand its fleet, growing from 28 aircraft in service in the first quarter of 2010, to 46 aircraft by the end of 2011 and a projected 52 aircraft by the end of 2012.  In the third quarter, the airline announced new service to Palm Springs and Puerto Vallarta.  In the past twelve months alone, the carrier has introduced its unique, low-fare service to Chicago, Dallas-Fort Worth, Los Cabos, Cancun, Palm Springs and Puerto Vallarta.

Other key milestones achieved in the third quarter of 2011 include:

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

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Virgin America, Inc.

 

Consolidated Statement of Operations

 

For the Three and Nine Months Ending September 30, 2011 and 2010

(In Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended
September 30

 

Percent

 

Nine months ended
September 30

 

Percent

 

 

2011

 

2010

 

Change

 

2011

 

2010

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

   Guest

$266,842

 

$183,850

 

45.1%

 

$697,169

 

$483,387

 

44.2%

 

   Other

23,794

 

18,251

 

30.4%

 

63,141

 

49,962

 

26.4%

 

Total operating revenues

290,636

 

202,101

 

43.8%

 

760,310

 

533,349

 

42.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Aircraft fuel

110,143

 

59,195

 

86.1%

 

306,787

 

183,869

 

66.9%

 

   Aircraft rents

42,405

 

30,135

 

40.7%

 

122,632

 

85,947

 

42.7%

 

   Wages, salaries and related costs

35,323

 

27,053

 

30.6%

 

101,562

 

80,365

 

26.4%

 

   Aircraft maintenance

14,713

 

9,084

 

62.0%

 

40,936

 

27,014

 

51.5%

 

   Landing fees and other rents

22,530

 

17,624

 

27.8%

 

63,454

 

50,200

 

26.4%

 

   Sales and marketing

20,647

 

15,127

 

36.5%

 

61,561

 

42,712

 

44.1%

 

   Guest services and supplies

11,050

 

8,222

 

34.4%

 

31,019

 

23,832

 

30.2%

 

   Depreciation

1,953

 

2,546

 

(23.3%)

 

6,743

 

8,173

 

(17.5%)

 

   Other operating expenses

15,646

 

12,084

 

29.5%

 

44,881

 

32,258

 

39.1%

 

Total operating expenses

274,410

 

181,070

 

51.5%

 

779,575

 

534,370

 

45.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss)

16,226

 

21,031

 

(22.8%)

 

(19,265)

 

(1,021)

 

1786.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating margin

5.6%

 

10.4%

 

(4.8)

pts

(2.5%)

 

(0.2%)

 

2.3

pts

 

 

 

 

 

 

 

 

 

 

 

 

 

Other (income) expense

19,528

 

13,553

 

44.1%

 

50,311

 

42,561

 

18.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

($3,302)

 

$7,478

 

(144.2%)

 

($69,576)

 

($43,582)

 

59.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

$18,179

 

$23,577

 

(22.9%)

 

($12,522)

 

$7,152

 

(275.1%)

 

EBITDAR

$60,584

 

$53,712

 

12.8%

 

$110,110

 

$93,099

 

18.3%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted for unrealized (gains) losses on fuel derivatives:

 

 

 

 

 

 

 

 

 

   EBITDAR

$59,450

 

$51,661

 

15.1%

 

$117,279

 

$104,382

 

12.4%

 

   Operating income (loss)

$15,092

 

$18,980

 

(20.5%)

 

($12,096)

 

$10,262

 

(217.9%)

 

   Operating margin

5.2%

 

9.4%

 

(4.2)

pts

(1.6%)

 

1.9%

 

(3.5)

pts

  

 

 

 

 

 

 

 

 

 

 

 

 

 

Virgin America Inc.

 

 

 

 

 

 

 

 

 

 

Comparative Operating Statistics

(In Millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended 

 

 

 

Nine months ended 

 

 

 

 

 

September 30

Percent

 

 

September 30

Percent

 

 

2011

 

2010

 

Change

 

 

2011

 

2010

 

Change

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Available seat miles (ASMs)(millions)

2,576

 

1,949

 

32.2

 

 

7,198

 

5,601

 

28.5

 

Scheduled ASMs (millions)

2,575

 

1,948

 

32.2

 

 

7,198

 

5,600

 

28.5

 

Average stage length (miles)

1,566

 

1,592

 

(1.6)

 

 

1,573

 

1,533

 

2.6

 

Aircraft in service (average)

39

 

28

 

39.3

 

 

37

 

28

 

32.1

 

Fleet utilization (hours per day)

12.7

 

12.9

 

(1.6)

 

 

12.7

 

12.9

 

(1.6)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Guests

1,370,678

 

992,194

 

38.1

 

 

3,656,615

 

2,841,598

 

28.7

 

Scheduled revenue passenger miles (millions)

2,170

 

1,641

 

32.2

 

 

5,846

 

4,526

 

29.2

 

Load factor

84.2%

 

84.3%

 

(0.1)

pts

 

81.2%

 

80.8%

 

0.4

pts

Average fare 

$194.68

 

$185.30

 

5.1

 

 

$190.66

 

$170.11

 

12.1

 

Total revenue per available seat mile - RASM (cents)

11.28

 

10.37

 

8.8

 

 

10.56

 

9.52

 

10.9

 

Guest revenue per available seat mile (cents)

10.36

 

9.44

 

9.7

 

 

9.69

 

8.63

 

12.3

 

Yield per passenger mile (cents)

12.30

 

11.20

 

9.8

 

 

11.93

 

10.68

 

11.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost per available seat mile - CASM (cents)

10.65

 

9.29

 

14.6

 

 

10.83

 

9.54

 

13.5

 

Cost per ASM, excluding fuel (cents)

6.38

 

6.25

 

2.1

 

 

6.57

 

6.26

 

5.0

 

Fuel cost per gallon

$3.25

 

$2.28

 

42.5

 

 

$3.25

 

$2.47

 

31.6

 

Fuel gallons consumed (thousands)

33,911

 

26,004

 

30.4

 

 

94,441

 

74,387

 

27.0

 

Teammates (FTEs)

2,022

 

1,655

 

22.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 four 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 and 2011 '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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