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Virgin America posted a $33.5 million net income in its third quarter, besting the same period last year by over $44 million. And while the airline is still operating at a loss for the first nine months of 2013, its losses are just over $4 million for the year at this point, as opposed to $120 million last year.
“Our strong financial results demonstrate the success of a series of strategic initiatives that started in late 2012,” said David Cush, Virgin America’s President and CEO in a statement. “Although the industry overall is trending in a positive direction, it is notable that Virgin America has consistently led the U.S. industry in RASM growth over the past year. With the leading product in the domestic skies, we are well-positioned to continue building on these results in 2014 and beyond.”
Yesterday Virgin asked the U.S. Justice Department for permission to file a brief in opposition to the American Airlines and US Airways merger.
Although privately held, Virgin America announced these financial results in advance of the mandatory quarterly reports it must file with the U.S. Department of Transportation.
SAN FRANCISCO, Nov. 12, 2013 /PRNewswire via COMTEX/ — Virgin America today reports its financial results for the third quarter of 2013 with operating income of $44.4 million and net income of $33.5 million on total revenue of $387.3 million. The airline posted an operating margin of 11.5 percent – a 7.2 point improvement for the third quarter, driven largely by a 9.4 percent growth in revenue per available seat mile (“RASM”) over the year-earlier period.
Third Quarter 2013 Financial Highlights
— Virgin America reported $33.5 million in net income compared to a year-ago loss of $12.6 million, an improvement of $46 million.
— The Company significantly outpaced all U.S. carriers with year-over-year RASM growth of 9.4 percent on a 3.9 percent decrease in capacity. Virgin America has now led the industry in RASM growth every month since October 2012.
— Load factor increased by 0.9 points and yield increased by 7.4 percent year-over-year.
— Operating revenue was $387.3 million, an increase of 5.2 percent from the third quarter of 2012.
— Cost per available seat mile (CASM) excluding fuel increased by 4.5 percent year-over-year, largely due to the airline’s expansion into major airports like Newark Liberty International Airport (EWR), increased labor costs, and decreased utilization of the fleet as part of the Company’s plan to improve unit revenue.
— Year-to-date, Virgin America has generated operating income of $57.3 million, an increase of $94.1 million from the first nine months of 2012.
— Unrestricted cash was $156.9 million as of September 30, 2013, an increase of $80.9 million since December 31, 2012.
“Our strong financial results demonstrate the success of a series of strategic initiatives that started in late 2012. Reduced capacity growth, a focus on increasing unit revenue, and changes to our capital structure are all contributing to improving results. Although the industry overall is trending in a positive direction, it is notable that Virgin America has consistently led the U.S. industry in RASM growth over the past year. With the leading product in the domestic skies, we are well-positioned to continue building on these results in 2014 and beyond,” said David Cush, Virgin America’s President and CEO.
Since taking a pause in its fleet and network expansion, 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 again until the second half of 2015, when aircraft on order from Airbus are scheduled for delivery.
Virgin America 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 to approximately $10 million per quarter through 2014. Had the May 2013 restructuring been completed prior to the beginning of the year, Virgin America’s year-to-date net income would have been approximately $30 million higher.
Key milestones achieved in the third quarter of 2013 include:
— In July, Virgin America was named “Top Domestic Airline” in the prestigious Travel + Leisure 2013 World’s Best Awards readers’ survey for the sixth consecutive year.
— In August, the airline marked its sixth anniversary with festivities celebrating the airline’s continued job growth, network expansion and consistent award-winning service.
— In September, the airline announced that it would bring back its popular nonstop seasonal flights between Palm Springs International Airport (PSP) and New York’s John F. Kennedy International Airport (JFK) for the 2013-2014 winter season.
— Also in September the airline became the “Official Airline of Make-A-Wish Greater Bay Area” – as part of this partnership, the airline is donating free flights to the charitable organization over 2013-2014 and Virgin America teammates will treat San Francisco Bay Area-based families to a special VIP experience on board on their way to have their wishes fulfilled.
— Virgin America was voted “Best Premium Class” among domestic airlines in Condé Nast Traveler’s 2013 Business Travel Poll – which surveyed 79,000 business travelers. The annual independent survey of the magazine’s business travelers ranked Virgin America as the top U.S. airline for Premium Class service for the sixth consecutive year.
— In the third quarter, the carrier added four new interline partners. By the end of the third quarter 2013, Virgin America had 30 interline partners, up from 17 in the same in period in 2012.
— The airline’s baggage handling rate was 1.31 mishandled baggage reports per 1,000 guests in July and 1.06 mishandled baggage reports per 1,000 guests in August, placing it first among all U.S. carriers reporting to the Department of Transportation (DOT) for baggage reliability.
In October, the airline once again took top honors as “Best U.S. Airline” in the prestigious Condé Nast Traveler’s 2013 Readers’ Choice Awards. The results of this year’s Readers’ Choice Awards were reported in the November issue of Condé Nast Traveler magazine and online at http://www.cntraveler.com/readers-choice-awards. This year, Condé Nast Traveler had a record-breaking 79,268 readers participate in the survey, close to double the number of survey takers in 2012. These savvy travelers cast 1.3 million votes for more than 16,000 properties around the world.
Since its launch in 2007, Virgin America has created 2,700 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).