Virgin America Reports Second Quarter 2012 Financial Results
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.
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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.
Virgin America Inc.
Consolidated Statement of Operations
For the Three and Six Months Ended June 30, 2012 and 2011
(unaudited, in thousands)
3 Months Ended June 30, Percent 6 Months Ended June 30, Percent
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2012 2011 Change 2012 2011 Change
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(unaudited)
Operating revenues:
Guest $319,443 $247,125 29 $560,317 $430,327 30
Other 27,896 21,416 30 54,060 39,347 37
347,339 268,541 29 614,377 469,674 31
Total operating revenues
Operating expenses:
Aircraft fuel 141,291 113,290 25 263,826 196,644 34
Aircraft rent 55,722 41,798 33 108,248 80,227 35
Salaries, wages and benefits 44,266 33,893 31 85,753 66,239 29
Landing fees and other rents 27,181 21,336 27 52,814 40,924 29
Sales and marketing 30,011 22,867 31 52,741 40,913 29
Maintenance 19,692 13,261 48 37,395 26,223 43
Guest services and supplies 12,456 10,838 15 24,303 19,969 22
Depreciation 2,726 1,863 46 5,272 4,790 10
Other operating expenses 18,072 15,396 17 36,693 29,236 26
351,417 274,542 28 667,045 505,165 32
Total operating expense
(4,078) (6,001) 32 (52,668) (35,491) (48)
Operating loss
27,677 15,698 76 55,099 30,783 79
Other expense, net
$(31,755) $(21,699) (46) $(107,767) $(66,274) (63)
Net loss
EBITDAR 54,370 37,660 44 60,852 49,526 23
Virgin America Inc.
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Comparative Operating Statistics
3 months ended June 30 Percent 6 months ended June 30 Percent
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2012 2011 Change 2012 2011 Change
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Available seat miles (ASMs)(millions) 3,238 2,449 32.2 6,063 4,622 31.2
Departures 14,414 11,176 29.0 27,169 20,958 29.6
Average stage length (miles) 1,582 1,563 1.2 1,574 1,576 (0.1)
Aircraft in service (average) 51 38 34.2 49 37 32.4
Fleet utilization (blk hours per ac day) 12.7 12.7 - 12.6 12.7 (0.8)
Guests 1,601,275 1,281,844 24.9 3,029,164 2,285,937 32.5
Average fare $199.49 $192.79 3.5 $184.97 $188.25 (1.7)
Yield per passenger mile (cents) 12.38 ¢ 12.17 ¢ 1.7 11.56 ¢ 11.71 ¢ (1.3)
Scheduled revenue passenger miles (millions) 2,580 2,030 27.1 4,846 3,676 31.8
Load factor 79.7% 82.9% (3.2) pts 80.1% 79.5% 0.6 pts
Guest revenue per available seat mile (cents) 9.87 ¢ 10.09 ¢ (2.2) 9.26 ¢ 9.31 ¢ (0.5)
Total revenue per available seat mile (cents) 10.73 ¢ 10.97 ¢ (2.2) 10.13 ¢ 10.16 ¢ (0.3)
Cost per available seat mile - CASM (cents) 10.85 ¢ 11.21 ¢ (3.2) 11.00 ¢ 10.93 ¢ 0.6
Cost per ASM, excluding fuel (cents) 6.49 ¢ 6.59 ¢ (1.5) 6.65 ¢ 6.67 ¢ (0.3)
Fuel cost per gallon $3.40 $3.52 (3.4) $3.37 $3.25 3.7
Fuel gallons consumed (thousands) 41,587 32,192 29.2 78,178 60,530 29.2
Teammates (FTEs) 2,427 1,914 26.8 2,358 1,865 26.5
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 five 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, 2011 and 2012 ‘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(TM) WiFi on every flight and hosts the largest in-flight entertainment library in the North American skies via the touch-screen Red(TM) platform. For more: www.virginamerica.com
SOURCE Virgin America
