Virgin America Reports Second Quarter 2013 Financial Results

SAN FRANCISCO, Aug. 7, 2013 /PRNewswire/ -- Virgin America today reports its financial results for the second quarter of 2013 with operating income of $27.9 million and net income of $8.8 million on total revenue of $376 million for the three months ending June 30.   The airline posted an 8.6 point improvement in operating margin for the second quarter, driven largely by a 7.8 percent growth in revenue per available seat mile ("RASM") over the year-earlier period.

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

Second Quarter 2013 Financial Highlights

• Virgin America reported $8.8 million in net income compared to a year-ago loss of $31.8 million, an improvement of more than $40 million.
• The Company significantly outpaced all U.S. carriers with year-over-year RASM growth of 7.8 percent on flat capacity.   Virgin America has now led the industry in RASM growth in each of the past three quarters.
• Load factor increased by four points and yield increased by one percent year-over-year.
• Operating revenue was $376 million, an increase of 8 percent from the second quarter of 2012.
• Cost per available seat mile (CASM) excluding fuel increased by just 1.8 percent year-over-year.
• Earnings before interest, taxes, depreciation and amortization, and aircraft rentals ("EBITDAR") increased 52 percent to $82.6 million from $54.4 million in the same period a year-ago.
• Year-to-date, Virgin America has generated an operating income of $12.9 million, its first-ever cumulative operating profit for the first and second quarters, and an increase of $65.6 million from the first six months of 2012.
• Unrestricted cash was $148.2 million as of June 30, 2013, an increase of $90 million since March 31, 2013.

"Our first ever second-quarter net profit and year-to-date operating income show that our company is now poised to produce meaningful profitability," said David Cush, Virgin America's President and CEO.  "As we have reduced our growth from the 30 percent-plus level of the past few years to a more sustainable rate, our network has begun to mature into a profitable one, and our markets continue to show industry-leading RASM growth.  We have always said that once people fly with us, they stick with us, and the second quarter is a testament to that and to the hard work of our team."

Virgin America completed a major two-year growth phase during 2012, having taken delivery of 24 aircraft between the second quarter of 2010 and the second quarter of 2012, almost doubling the size of the fleet.  With this major growth phase largely behind the Company, Virgin America is now experiencing improved revenue and profitability performance across its network. Virgin America took delivery of one aircraft in the first quarter of 2013, increasing its total operating fleet to 53 aircraft.  The Company does not plan to increase its fleet size again until the second half of 2015, when aircraft on order from Airbus are scheduled for delivery.  The Company expects continued strong improvement in year-over-year financial performance through the remainder of 2013.

The Company completed a restructuring of the majority of its debt with investors during May 2013, eliminating more than $300 million of existing debt and accrued interest.  As a result of this restructuring, Virgin America expects its interest expense to substantially decline in the second half of 2013 and beyond, to approximately $10 million per quarter.  Had the May 2013 restructuring been completed prior to the beginning of the second quarter, Virgin America's net income would have been approximately $18 million for the quarter.  Year-to-date, Virgin America's net loss would have been approximately $8 million after taking into account the impact of the restructuring.  In addition, Virgin America completed a debt offering in May, raising $75 million.  Combined with $15 million of positive cash flow during the quarter, this increased the Company's unrestricted cash by $90 million, to $148.2 million.

In the second quarter of 2013, the airline brought a small number of strategically important new markets online by reallocating capacity from existing markets.  In early April, the carrier inaugurated new nonstop service from both Los Angeles International Airport (LAX) and San Francisco International Airport (SFO) to Newark Liberty International Airport (EWR), an important destination for business travelers.  Also in April, the airline inaugurated new nonstop service between Los Angeles and Las Vegas McCarran International Airport (the carrier already served Las Vegas from both San Francisco and New York John F. Kennedy International Airport).  In May, the airline launched Norman Y. Mineta San Jose International Airport to LAX service, expanding its Northern California footprint beyond its San Francisco home base.  Later in May the airline inaugurated daily flights from San Francisco to Austin-Bergstrom International Airport.  In June, the carrier launched new summer seasonal service between San Francisco and Alaska's Ted Stevens Anchorage International Airport.

The addition of three daily roundtrip flights between Newark and both San Francisco and Los Angeles significantly expanded Virgin America's presence in the New York and New Jersey area. The airline had already built a following of bi-coastal flyers with its popular nonstop flights from both LAX and SFO to JFK. In three months of operations, the Newark flights are performing ahead of the Company's forecasts, and Virgin America is achieving a revenue share in excess of its share of capacity in both markets.  With the addition of Newark, Virgin America now serves nine of the top 10 business markets from SFO and eight of the top 10 business markets from LAX. Virgin America is the only airline serving the Newark-West Coast routes to offer WiFi, power outlets and live satellite TV at every seat on every flight. 

"Our experience in Newark is a strong endorsement of our product superiority and the preference guests have for our award-winning service," Cush said.  "Since launching Newark service just three months ago, our Los Angeles and San Francisco flights have quickly found a strong guest following, and we are already seeing early signs of profitability on these important transcon business routes." 

Prior to Virgin America's entry, the San Francisco-Newark route was a monopoly route and the Los Angeles-Newark route was not served by any low-fare carriers.  As a result, flights between Newark and San Francisco had some of the highest average fares of any domestic US route. After Virgin America announced plans to enter the Newark market in late 2012, fares for flights between Newark and California's two largest airports dropped by as much as one-third and the market size has grown by 75 percent in EWR-SFO and doubled in EWR-LAX. 

Operational Highlights

Key milestones achieved in the second quarter of 2013 include:

• In its first year of eligibility, Virgin America in April topped the Airline Quality Rating, an annual study of airline industry performance conducted by Wichita State University and Purdue University.
• Virgin America brought its Sharklet-equipped "Jersey Girl," its 53^rd Airbus A320-family aircraft, into service.
• In April, Virgin America inaugurated service between Newark , N.J. and Los Angeles and San Francisco.
• In April, the carrier also expanded service to Las Vegas with three daily flights to Los Angeles.
• In May, Virgin America was voted "Best Airline" in a survey by Consumer Reports.
• Virgin America began service between Los Angeles and San Jose, California on May 1.
• Also in May, the carrier launched new flights from San Francisco to Austin, Texas.
• Virgin America began seasonal service between San Francisco and Anchorage, Alaska in June.
• In the second quarter, the carrier added three new interline partners: China Eastern Airlines, Etihad Airways and Scandinavian Airlines (SAS). By the end of the second quarter 2013, Virgin America had 26 interline partners, up from eight in the same in period in 2012.
• The airline's baggage handling rate was 0.89 mishandled baggage reports per 1,000 guests in April and 1.15 mishandled baggage reports per 1,000 guests in May, placing it first among all U.S. carriers reporting to the Department of Transportation (DOT) for baggage reliability.
• In June, the carrier began releasing monthly operating results, consistent with the practice of publicly traded airlines.

Since its launch in 2007, Virgin America has created 2,600 new jobs and now flies to San Francisco, Los Angeles, New York, Newark, Washington D.C. (IAD and DCA), Las Vegas, San Diego, Seattle, Boston, Fort Lauderdale, Orlando, Dallas-Fort Worth, Los Cabos, Cancun, Chicago, Puerto Vallarta, Palm Springs (seasonal), Philadelphia, Portland, San Jose, Austin and Anchorage (seasonal). 

Although a privately held company, Virgin America is announcing these financial results in advance of the DOT quarterly reports.

Photos of Virgin America's unique aircraft: http://www.virginamerica.com/about/airline-photos/virgin-america-pictures.html

Broadcast quality video b-roll can also be downloaded at:  https://www.virginamerica.com/html/39049.zip

About Virgin America: Headquartered in California, Virgin America offers guests attractive fares and a host of innovative features aimed at reinventing air travel. Virgin America was named "Best Domestic Airline" in the Condé Nast Traveler 2008, 2009, 2010, 2011 and 2012 'Readers' Choice' Awards and "Best Domestic Airline" in Travel + Leisure's 2008, 2009, 2010, 2011, 2012 and 2013 '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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