Transport Airlines

Newly Profitable Virgin America Needs to Make a Habit of Making Money

Apr 05, 2014 11:00 am

Skift Take

Virgin America has just achieved profitability and still has a lot to prove before an IPO would be viable.

— Dennis Schaal

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The first Virgin America flight lands in San Francisco, California, August 8, 2007. John Decker / Reuters

Virgin America’s operating profits during the last four years have been strongest during the third quarter, which is during the high travel season in the U.S.

Arguably, the carrier needs to evolve its business to a point where it can achieve net profitability and positive operating income more consistently – especially as it continues to make rumblings of an initial public offering.

Throughout its nearly seven years in operation, Virgin America has lived a paradoxical existence. The carrier is a consistent passenger favourite for its onboard amenities and service, but up until very recently has never managed to translate its popular appeal into profitability.

With just 6 million passengers carried in 2013, Virgin America still only represents a small fraction of US domestic traffic, which suggests a solid upside for growth. However, it is only when the carrier opted to slow its growth that it finally turned a corner to profitability.

Now Virgin America faces an altogether different challenge – sustaining its financial momentum.

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This story originally appeared on CAPA – Centre for Aviation, a Skift content partner.

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