Virgin America Announces 2nd Quarter 2012 Results ? Civil ...

Quoting ROSWELL41 (Thread starter): VX has posted a $4 million loss for the quarter. Unfortunate for what is supposed to be one of the strongest quarters of the year for airlines in general. Very disappointing considering that even bankrupt AMR posted an operating profit and a better net margin -- even including bankruptcy reorganization expenses! Load factor was down 3.2 points year-over-year and RASM declined 2 percent even as peer JetBlue's RASM increased 6 percent with a load factor increase of 3.8 points. The decrease in CASM was almost entirely attributable to lower fuel costs and longer average stage length. The exit scenario for Branson and the "U.S. investors" is an IPO, but these numbers won't support an IPO in the next 12 months unless Q3 is a complete blow-out -- and I don't think the macroeconomic environment supports that.

This would support the rumor that investors are losing patience. The key metrics are headed in the wrong direction. VX caters too much to the price sensitive customer looking for an exciting experience and not the loyal business traveler expecting first class upgrades etc. The long stage length of flights isn't helping either. Best of luck but I don't see VX having a bright future in this form.

Another fantastic quarter I dont see how that model can work in this economy?

I love the spin...$4M.... Now if we dig slightly deeper and don't read the Virgin America corporate koolaid and we look at the REAL numbers....Another $31M loss for the quarter...up $10M from last year. And for the year....$107M loss....just ever so slightly above their $66M loss a year before. People, these are not good numbers. But there is nothing to see here...Doing great...Keep on keepin' on.

Quoting SuperDash (Reply 4): But there is nothing to see here...Doing great...Keep on keepin' on. If AMR can turn it around, VX can turn it around too!?

While I detest Virgin America and its old school 1800's robber baron style origin story, i will grant them that showing an operational profit is the first key to sucess. Won't keep you alive, but that "$4M" is atleast close... You are right though, investors will want to see much more from a company as small and as middle aged as Virgin America has become. Can't play the startup card anymore with the money folks, yet its not a large established airline that shaving a few % here and there can suddenly start putting hundreds of millions in the bank.

I think the doomsayers are just loving this but you dont invest in the airline business expecting short term return. VX is clearly on a 10 year model and i think they are progressing nicely. All figures point to getting closer to their goal each time. The PRESS RELEASE is just that but theres alot more to the VX story than what the posters above have detracted from it so i feel the entire post needs to be visible. 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: In June 2012, the airline inaugurated service to Portland International Airport (PDX) from both San Francisco International Airport (SFO) and Los Angeles International Airport (LAX); In June 2012, the airline opened a new flight training facility with a state-of-the-art Required Navigational Performance (RNP)-certified CAE Airbus A320 full-flight simulator? the first such pilot training facility of its kind in Northern California; In May 2012, the airline launched ticket sales on its new Washington Reagan National (DCA) nonstop flight from SFO, after receiving DOT approval to operate the route; In May 2012,Virgin America, Virgin Atlantic Airways and Virgin Australia, announced a first of its kind joint entertainment, digital and out-of-home advertising campaign to celebrate the unique Virgin in-flight experience and mark the airlines' global frequent flyer partnership ? which went live earlier in the spring of 2012; In April 2012, Virgin America launched its first flights to Philadelphia International Airport (PHL) from SFO and LAX; In June 2012, Virgin America applied with DOT for its first codeshare agreement with Virgin Australia, which went live in July; Virgin America added Japan Airlines as an interline partner in June, further expanding the airline's reach. Virgin America has implemented multiple interline partnerships in the first half of 2012. The airline now has 17 interline partners total. 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. PR Newswire (http://s.tt/1odXk)

This airline's financial performance has gone from bad to worse....I just don't see light at the end of the tunnel

Quoting NWADTWE16 (Reply 7): I think the doomsayers are just loving this but you dont invest in the airline business expecting short term return. VX is clearly on a 10 year model and i think they are progressing nicely. All figures point to getting closer to their goal each time. No investor would willingly pour money into an aviation start-up whose business plan didn't forecast any kind of returns until the 10th year. VX can't show any trending data that suggests they are moving closer to profitability; if anything, it's the opposite. One number may look better in one quarter, but every time, another number suffers (i.e., CASM, RASM, etc).

look VX havent made a profit sense it began how long can they keep it up

Quoting NWADTWE16 (Reply 7): The Company took delivery of one aircraft during the second quarter And only one more to come in the next year. So much for growth spreading out costs. Their CASM is as low as it's going to go.

Quoting NWADTWE16 (Reply 7): 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. Does VX management actually think people will believe this statement? The "cost pressures of growth" are generally DOWNWARD -- because fixed costs like back-office staff, I.T. systems, executive pay, marketing, etc. can be spread over more customers and tickets, because the new employees hired in to support that growth start at the bottom of the pay scale, and because the new aircraft entering the fleet enjoy a maintenance holiday for the first several years. As growth slows, VX will NOT see improved economies of scale; rather their labor & maintenance unit costs will increase. Quoting NWADTWE16 (Reply 7): "With improved margins in the second quarter, our investment in building our network over the past two years is beginning to pay off," The margins didn't improve because of their "investment in building [the] network." Their margins improved because fuel was less expensive. If fuel costs had stayed level, their operating margin would have been worse than in 2Q2011 at -2.6% vs -2.2%. The EBITDAR number is specious since you can't run the airline without planes and their fleet costs nearly $20 million/month to rent. EBITDAR is up $17 million largely because aircraft rent was up $14 million and fuel was down $5 million. Quoting NWADTWE16 (Reply 7): VX is clearly on a 10 year model and i think they are progressing nicely. VX is not on a "10 year model." They've been planning for an IPO this year or next -- but a net loss of $108 million for the fist six months of this year won't support an IPO in 2013, either.

Quoting NWADTWE16 (Reply 7): I think the doomsayers are just loving this but you dont invest in the airline business expecting short term return. Your right about one thing - don't invest in an airline period and expect any kind of return.

With all of these airline mergers UA/CO, DL/NW and Southwest/Air Tran and AA going down the tubes ,it is going to be impossible for airlines like Virgin America to survive in this economic environment. Southwest very dominant in as a low cost carrier and they are going to be hard to compete with. The only way I see Virgin America Not closing up shop is if they merge with Jet Blue and/or Alaska Airlines.

Now i only see what i see but since VX joined Sabre, maybe a year ago (not even sure if its that long) they have become much more accessible to especially Business travelers and i can say for certain they have an extremely loyal base. Besides the base people are jumping all over any opportunity to fly them and the prices are much higher than what i was seeing 6 months ago. They are always full on all the red-eyes from SFO/LAX-FLL-BOS-PHL-JFK looks like ORD loads might not be so great and PDX looks light. SEA seems pretty good and DFW is a sure winner, especially as they are picking up alot of new pax due to the current AA debacle. Once people have flown them they litteraly beg for them if its even an option. Not sure the RASM on the inter-Cali routes but they are all always at capacity as far as availability. Even the LAS-JFK is usually 80% or so. I know everyone sees no profit as 'oh so horrible, its all over news' but im willing to bet that VX investors are seeing the progress and we are NOW in the busy business traveler season not just out of it as someone said before. Summer is leisure and their routes are hardly leisure. maybe someone from VX can confirm this but they must be banking alone off the Transcons, there is always limited or No availability in all classes..and overall take into account they must have one of the higher stage lengths comparitably.

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