Virgin America reported a $12 million operating loss

[Grandpa +65]

SAN FRANCISCO, April 21, 2011 /PRNewswire/ -- Virgin America today reported its financial results for the fourth quarter of 2010 and full year 2010. Against the backdrop of higher fuel costs and the 2010 winter storms, the airline reported strong revenue performance with a 32 percent jump in revenue versus full year 2009. The airline reported revenues of $191 million for the fourth quarter of 2010 and $724 million for full year 2010 – a year-over-year revenue increase of 25 percent and 32 percent respectively (on a 17 percent year-over-year increase in capacity for the full year). For full year 2010, Virgin America reported a $12 million operating loss on revenues of $724 million — a 68 percent year-over-year improvement, and notable given that the airline's fuel costs also increased by $73 million for the same period due to higher fuel costs per gallon. The airline reported a (1.7) percent operating margin for full year 2010. As the airline continued to deliver significant growth, it reported industry-leading unit revenue performance (RASM) with a 16 percent improvement in RASM year-over-year for full year 2010. The growing airline's stage-length adjusted guest unit revenue was also up 12 percent for the quarter and 20 percent for the full year. In 2010, the company reported its first quarterly net profit in the third quarter. Despite its revenue performance and its first quarterly net profit, the airline's full year 2010 results were lower than originally forecast primarily due to increased fuel costs, higher costs of growth and the impact of the East Coast storms.
(Logo: http://photos.prnewswire.com/prnh/20090123/VIRGINAMERICALOGO)
"As a young airline still fueling growth, we continue to move in the right direction with our top line progress and revenue results, especially given the backdrop of global recession and an unprecedented run-up in oil prices since our 2007 launch," said Virgin America President and CEO David Cush. "For the last three years, our passenger unit revenue performance gains have surpassed industry performance. With a loyal base of flyers, an unrivalled product and the best service team in the business, we're pleased with our company's trajectory in what was just our third year of operations."
The airline grew its fleet from 28 aircraft to 34 aircraft during 2010. The airline's yield per passenger mile for full year 2010 was 11 cents, up 16 percent compared to full year 2009. Virgin America continues to hedge in order to help manage fuel price volatility. The airline hedged 50 percent of its 2011 projected fuel requirements, with 77 percent of its first quarter 2011 requirements hedged at an average crude oil call strike price of $82 per barrel.
Although a privately held company, Virgin America is announcing these earnings results in advance of the Department of Transportation's (DOT) quarterly reports.
Full Year 2010 Reporting Highlights:

• Operating results: The airline reported an operating loss of $12 million (a 68 percent improvement year-over-year). This resulted in a (1.7) percent operating margin for the year (a 5.4 point improvement year-over-year).
• Load factors: Revenue passenger miles increased 15 percent on a 17 percent increase in capacity, resulting in a 2010 load factor of 82 percent – a drop of 1.3 points year-over-year.
• Top line progress: Revenue in 2010 was up 32 percent versus 2009. RASM increased by 16 percent year-over-year. The airline's stage-length adjusted guest unit revenue was up 20 percent versus 2009.
• Cost control: Operating expense per available seat mile excluding fuel (ex-fuel CASM) dropped 2 percent in 2010 even with investment to fuel growth (training, people and aircraft in modification), demonstrating the carrier's continued commitment to cost control.
• Cash: The airline ended 2010 with $30 million in unrestricted cash and $66 million in total liquidity.

http://finance.yahoo.com/news/Virgin-America-Reports-Fourth-prnews-1717135052.html?x=0&.v=1

 

[ualdriver]

More accurately, they lost 25M on 190M of revenue. Ouchy. That is significant bleed and cannot continue at this rate for the rest of the year without a cash infusion based on their reported cash balances.

I love it when airlines like to refer to "operating losses" when net losses are a bit more accurate, especially when airlines tend to be highly leveraged and should account for the hefty cost of interest on their debt. VA had some pretty significant expenses under "other" expenses that are not accounted for under their operating loss.

 

[Lake Alice]

It's all very interesting. The numbers don't lie but they don't tell the whole truth.

 

[strobzz]

More accurately, they lost 25M on 190M of revenue. Ouchy. That is significant bleed and cannot continue at this rate for the rest of the year without a cash infusion based on their reported cash balances.

I love it when airlines like to refer to "operating losses" when net losses are a bit more accurate, especially when airlines tend to be highly leveraged and should account for the hefty cost of interest on their debt. VA had some pretty significant expenses under "other" expenses that are not accounted for under their operating loss.

Ah,and how much did Con/Ual lose?

 

[ualdriver]

Ah,and how much did Con/Ual lose?

UNICAL had an operating profit this quarter. Again, not the whole story as they have a lot of debt and pay almost 1B per year in interest on that debt. They had a 213M loss on 8.2B of revenue. 77M of that loss is due to integration costs.

 

[strobzz]

UNICAL had an operating profit this quarter. Again, not the whole story as they have a lot of debt and pay almost 1B per year in interest on that debt. They had a 213M loss on 8.2B of revenue. 77M of that loss is due to integration costs.

Ual driver,
I see that you flew L-188`s,are you a X-Zantopper?

 

[iflysky]

http://www.flightglobal.com/articles/2011/04/22/355900/virgin-america-plans-aircraft-deferrals.html

 

[ualdriver]

Ual driver,
I see that you flew L-188`s,are you a X-Zantopper?

Maybe

 

[ualdriver]

http://www.flightglobal.com/articles/2011/04/22/355900/virgin-america-plans-aircraft-deferrals.html

Interesting.

I remember Cush stated in an candid interview back in late 2008 or early 2009 (?) that VA was on the brink of liquidating due to the high fuel costs the industry incurred back in the summer of 2008. If we get a spike like we did back then, or this one continues, they might not make it through the year. I can't find anything about VA's current cash burn rate, but it probably isn't pretty. Or then again, maybe they'll find some new investors to invest some cash.

 

[Fins Up]

Could you see the strings Branson was using to control him.

Interesting.

I remember Cush stated in an candid interview back in late 2008 or early 2009 (?) that VA was on the brink of liquidating due to the high fuel costs the industry incurred back in the summer of 2008. If we get a spike like we did back then, or this one continues, they might not make it through the year. I can't find anything about VA's current cash burn rate, but it probably isn't pretty. Or then again, maybe they'll find some new investors to invest some cash.

 

[weasel_lips]

Virgin America Records Loss

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BY SUSAN CAREY

Virgin America, hit by rising fuel expenses and costs associated with its rapid expansion, said its fourth-quarter net loss widened to $25.1 million from $18.8 million a year earlier.
"Current fuel prices basically consumed all of our profitability," David Cush, Virgin America's chief executive, said in an interview.
For the full year, the closely held discount carrier narrowed its loss to $68.7 million, from $80.8 million in 2009. Virgin America, which took wing in 2007, achieved its first ever net profit in the third quarter of 2010.
Revenue in last year's fourth quarter ...
http://online.wsj.com/article/SB10001424052748704889404576277051683714300.html?ru=yahoo&mod=yahoo_hs

 

[Tomct]

More accurately, they lost 25M on 190M of revenue. Ouchy. That is significant bleed and cannot continue at this rate for the rest of the year without a cash infusion based on their reported cash balances.

I love it when airlines like to refer to "operating losses" when net losses are a bit more accurate, especially when airlines tend to be highly leveraged and should account for the hefty cost of interest on their debt. VA had some pretty significant expenses under "other" expenses that are not accounted for under their operating loss.

If anyone is the "king" of spin it is UAL. one qtr losing billions and the next making it. I wish my check book worked like Tiltons. Just worry about yourselves and your shrinking growth plans and we will see you on the other side of this rising oil price. Good Luck!!

 

[ualdriver]

If anyone is the "king" of spin it is UAL. one qtr losing billions and the next making it. I wish my check book worked like Tiltons. Just worry about yourselves and your shrinking growth plans and we will see you on the other side of this rising oil price. Good Luck!!

Tomcat, show me where any of the above is "spin?" You just can't handle the truth, so you have to bash the messenger. I get it. I can take it.

Do you have a different analysis of VA's financials that is different? Please share. And since you guys have such a great relationship with management, would you mind dropping Cush an email and asking him what VA's current cash burn rate is? I just want all the facts so I won't have to "spin" anymore.

You might see us on the other side, you might not. If these crude oil prices continue, along with this high crack spread for Jet A, I am guessing not.

 

[NEDude]

Tomcat, show me where any of the above is "spin?" You just can't handle the truth, so you have to bash the messenger. I get it. I can take it.

Do you have a different analysis of VA's financials that is different? Please share. And since you guys have such a great relationship with management, would you mind dropping Cush an email and asking him what VA's current cash burn rate is? I just want all the facts so I won't have to "spin" anymore.

You might see us on the other side, you might not. If these crude oil prices continue, along with this high crack spread for Jet A, I am guessing not.

Not going to post specific numbers, but it is easy to glean. The amount of drop in liquidity directly corresponds to the amount of cash outlay for each new aircraft times the number of aircraft we took delivery of in the last part of last year. Not close to the same amount, EXACTLY, the same amount. So take that for what it is worth.

You also need to stop analyzing Virgin America the same way you do for publicly held airlines. They are different animals. Virgin America does not have to deal with profits/losses the same way a public company does.

The actions of the board of directors in recent months are not the actions of a group about to throw in the towel. Converting the MOU for new aircraft into a firm order, pay raises for the pilots, investing in a new training center in partnership with CAE. There is a lot of cash outlay that is going into funding the growth of this company.

Don't get me wrong, we are all concerned about the finances of the company. We as employees are watching it very closely. But keep this in mind - even though the numbers were just released to the public, the BOD has known them for some time. They were known by the BOD when they approved the pilot pay raise, and they were known by the BOD when the announced the training center partnership with CAE.

 

[ualdriver]

Not going to post specific numbers, but it is easy to glean. The amount of drop in liquidity directly corresponds to the amount of cash outlay for each new aircraft times the number of aircraft we took delivery of in the last part of last year. Not close to the same amount, EXACTLY, the same amount. So take that for what it is worth.

You also need to stop analyzing Virgin America the same way you do for publicly held airlines. They are different animals. Virgin America does not have to deal with profits/losses the same way a public company does.

The actions of the board of directors in recent months are not the actions of a group about to throw in the towel. Converting the MOU for new aircraft into a firm order, pay raises for the pilots, investing in a new training center in partnership with CAE. There is a lot of cash outlay that is going into funding the growth of this company.

Don't get me wrong, we are all concerned about the finances of the company. We as employees are watching it very closely. But keep this in mind - even though the numbers were just released to the public, the BOD has known them for some time. They were known by the BOD when they approved the pilot pay raise, and they were known by the BOD when the announced the training center partnership with CAE.

Unless you have access to private information, the above does not make any sense. Go to the VA homepage and read their quarterly consolidated earnings. 25M net loss on 190M of revenue? Your "liquidity" is dropping a lot faster that a few aircraft deposits, sorry. They did not make any statements concerning cash flow, which can be determined from a public airline's 10Q, but it can be inferred from their net loss that the burn is quite high at VA. I would also start to be concerned about "unrestricted" cash becoming "restricted" if the bleed continues, perhaps to meet loan covenants, or credit card requirements.

I don't know when you got your raise, but if I am not mistaken it was before our Libyan friend starting acting up and the resultant increase in crude oil prices. Unless your BOD is psychic, anything you infer about getting any sort of raise and everything being "OK" is a bridge too far for me.

 

[NEDude]

Unless you have access to private information, the above does not make any sense. Go to the VA homepage and read their quarterly consolidated earnings. 25M net loss on 190M of revenue? Your "liquidity" is dropping a lot faster that a few aircraft deposits, sorry. They did not make any statements concerning cash flow, which can be determined from a public airline's 10Q, but it can be inferred from their net loss that the burn is quite high at VA. I would also start to be concerned about "unrestricted" cash becoming "restricted" if the bleed continues, perhaps to meet loan covenants, or credit card requirements.

I don't know when you got your raise, but if I am not mistaken it was before our Libyan friend starting acting up and the resultant increase in crude oil prices. Unless your BOD is psychic, anything you infer about getting any sort of raise and everything being "OK" is a bridge too far for me.

I do have information that is given out to employees. There is a cost associated with the aircraft. It is not a "deposit". It involves the modification process to install the Virgin America interior. This is a cash outlay. I am not claiming the reduction in liquidity is a direct result of the new aircraft deliveries, but the numbers do match exactly. BTW I am not referring to the $25 million loss on $190 million in revenues, I am referring to the total liquidity reported by the airline as compared to the 3Q numbers.

As far as cash goes, "unrestricted" cash actually increased by 20%. This "unrestricted" cash has been increasing for the past two years, now at $30 million vs $22 million not too long ago, and $25 million at the end of Q3 2010.

Never claimed everything was "OK". As I stated "we are all concerned about the finances of the company". Also the Libyan crisis did arise after the BOD voted the pay raise. But this thread was about the 4th quarter and 2010 full year results. Those numbers were known by the BOD when the pay raise was voted in, and the new training center partnership was agreed to with CAE.

 

[ualdriver]

I do have information that is given out to employees. There is a cost associated with the aircraft. It is not a "deposit". It involves the modification process to install the Virgin America interior. This is a cash outlay. I am not claiming the reduction in liquidity is a direct result of the new aircraft deliveries, but the numbers do match exactly. BTW I am not referring to the $25 million loss on $190 million in revenues, I am referring to the total liquidity reported by the airline as compared to the 3Q numbers.

As far as cash goes, "unrestricted" cash actually increased by 20%. This "unrestricted" cash has been increasing for the past two years, now at $30 million vs $22 million not too long ago, and $25 million at the end of Q3 2010.

Never claimed everything was "OK". As I stated "we are all concerned about the finances of the company". Also the Libyan crisis did arise after the BOD voted the pay raise. But this thread was about the 4th quarter and 2010 full year results. Those numbers were known by the BOD when the pay raise was voted in, and the new training center partnership was agreed to with CAE.

Well, if you guys are getting numbers from your management, then it is public information. Let's hear 'em? Cush doesn't like to share with the rest of us, although he will be shortly....I just don't want to wait.

Unrestricted cash can fluctuate up and down as the airline meets (or doesn't meet) certain metrics determined by the people/entities that you owe money to. That could be a bank, a credit card company, or some investor who agreed to give you cash to keep you afloat or tide you over until the company is generating positive cash flow...or whatever else these guy want.

 

[NEDude]

Well, if you guys are getting numbers from your management, then it is public information. Let's hear 'em? Cush doesn't like to share with the rest of us, although he will be shortly....I just don't want to wait.

Unrestricted cash can fluctuate up and down as the airline meets (or doesn't meet) certain metrics determined by the people/entities that you owe money to. That could be a bank, a credit card company, or some investor who agreed to give you cash to keep you afloat or tide you over until the company is generating positive cash flow...or whatever else these guy want.

Why are you so interested in Virgin America's numbers? Is it really that important to you? It is not like Virgin America really has that much impact on United. Virgin America has only been around for 3.5 years, and United has been losing money for close to a decade.

When/if Virgin America goes public, you can read all of the numbers you want in the annual reports. Until then, you will just have to wait, or do some simple research on the internet yourself if you are all that interested - all of the information is out there, you just have to dig a little.

 

[ualdriver]

Why are you so interested in Virgin America's numbers? Is it really that important to you? It is not like Virgin America really has that much impact on United. Virgin America has only been around for 3.5 years, and United has been losing money for close to a decade.

When/if Virgin America goes public, you can read all of the numbers you want in the annual reports. Until then, you will just have to wait, or do some simple research on the internet yourself if you are all that interested - all of the information is out there, you just have to dig a little.

Please. Do you think I don't know how to find financial information for a company? Spare me the dig a little.

Small airlines like VA do have an impact. Virgin America drags down yields in just about every market they fly into. Since they hub in SFO, they obviously are of particular interest. Airlines like VA (Western Pacific, Legend, Vanguard, or pick the dozens of others that have come and gone) are part of the reason why major network carriers like United have "lost money for decades." Airlines like VA enter markets, charge fares they can't even make money on, take their pound of flesh, then fail. VA either failing or charging realistic fares is therefore of interest.

 

[Fubijaakr]

Please. Do you think I don't know how to find financial information for a company? Spare me the dig a little..

Disregard NEDude. He had to bring his "defend VX at any costs" show over here since he got banned at APC.

 

[NEDude]

Start-up companies are part of the cost of doing business in a capitalism based free market economy. Even communist China is acknowledging that new companies are good for the economy. VX is charging what the market dictates, and start-ups are hardly alone in undercutting fares. You expect me to believe that UAL droping fares and adding seven more daily flights from SFO to ORD is financially viable? It is a clear and blatant case of UAL trying to undercut Virgin America. EVERY airline is guilty of undercutting the competition in some form - legacy, start-up, mainline, regional, LCC - they ALL do it. Undercutting your competition and your competition undercutting you is part of the cost of doing business, in every business (eg. - "we'll match or beat our competitors discounts - we will not be undersold!!").

Virgin America disappearing from the landscape will not change the profitability of UAL, or any other airline. History has shown since deregulation another new entrant will quickly fill the void. Some may survive longer term - like America West, AirTran, Frontier and Jetblue did. Most will disappear like Skybus, Independence Air, Western Pacific and Vanguard. Make no mistake however, if Virgin America disappears, some other start-up WILL fill the void. It has happened time and again since 1978.

As for the specifics - VX ended 3Q 2010 with $25 million in unrestricted cash and $100 million in total liquidity. VX ended 4Q 2010 with $30 million in unrestricted cash and $66 million in total liquidity. VX took delivery of six aircraft in last half of 2010.

 

[NEDude]

Disregard NEDude. He had to bring his "defend VX at any costs" show over here since he got banned at APC.

I have been here a lot longer than at APC. Look at the registration dates, or is that too hard for you to do?

I would rather "defend VX at any cost" with facts and logic, than use emotional vitriol to bash other companies "at any cost".

As for the APC ban - it was for publicly outing the hypocrisy of a moderator who had told a certain user to stop posting about Virgin America and Allegiant, and then failed to follow through with the consequences. And guess what, if said moderator fails to follow through again, I will be banned even longer because I will call him out publicly on it again.

 

[weasel_lips]

This is starting to sound eerily like the Skybus threads.

 

[redflyer65]

This is starting to sound eerily like the Skybus threads.

That's kinda what I was thinking.

Unfortunately, a realitive new air carrier may not be able to sustain 120.00+ oil very long. Looks like that's where we might be headed.

 

[ttuite]

That's kinda what I was thinking.

Unfortunately, a realitive new air carrier may not be able to sustain 120.00+ oil very long. Looks like that's where we might be headed.

Lets hope not. Most folks won't fly when oil prices are that high. They can't afford to drive to the airport.

 

[tzskipper]

Please. Do you think I don't know how to find financial information for a company? Spare me the dig a little.

Small airlines like VA do have an impact. Virgin America drags down yields in just about every market they fly into. Since they hub in SFO, they obviously are of particular interest. Airlines like VA (Western Pacific, Legend, Vanguard, or pick the dozens of others that have come and gone) are part of the reason why major network carriers like United have "lost money for decades." Airlines like VA enter markets, charge fares they can't even make money on, take their pound of flesh, then fail. VA either failing or charging realistic fares is therefore of interest.

How do you explain this?:

[SIZE=-1]Low-cost carriers: growth expectations
04/19/2011
Flight Global[/SIZE]

[SIZE=-1][FONT=&quot]Low-cost carriers: growth expectations
By Graham Dunn [/FONT][/SIZE]

[SIZE=-1][FONT=&quot]....Oliver Wyman's recent Airline Economic Analysis shows the cost per available seat kilometre between network and what it calls value carriers in the USA has narrowed to its smallest since the study began seven years ago. And there is a similar blurring on the revenue side. "One of the things that really stood out in the study is the US unit revenue - American and Virgin America are virtually identical," says Pomeroy.[/FONT][/SIZE]...

 

[Grandpa +65]

Two weeks ago, I had a VA FO jumpseat and he said with all the deferral's of equipment, upgrade is now at 5-7 years at VA. He told me things aren't too pretty over there.

 

[Grandpa +65]

Virgin America incurs $69 million 2010 net loss

I just don't get this business plan.

By Aaron Karp | April 25, 2011

Virgin America A319. Photo: By Rob Finlayson.

Virgin America enjoyed its first profitable reporting period in the 2010 third quarter but was unable to sustain the momentum in the fourth quarter, posting a $25.1 million net loss, widened from an $18.8 million net deficit in the 2009 December quarter and pushing the company to a $68.7 million full-year net loss.

The 2010 deficit was narrowed from an $80.8 million net loss in 2009. The San Francisco-based carrier, which launched in August 2007, earned a $7.5 million net profit in the 2010 September quarter (ATW Daily News, Nov. 10, 2010). VX pointed to strong revenue growth in 2010 (up 32.2% compared to 2009 to $724 million) as evidence that it is progressing toward profitability, and noted that the year's results were hurt by high fuel costs and severe winter storms in the US northeast.

"As a young airline still fueling growth, we continue to move in the right direction with our top line progress and revenue results, especially given the backdrop of global recession and an unprecedented run-up in oil prices since our 2007 launch," President and CEO David Cush said in a statement issued Thursday. "We're seeing strong revenue performance in 2011 and with industry capacity discipline we remain encouraged by the outlook. Oil prices remain a concern and as a result we plan to tap the brakes slightly on our 2012 growth plans. That said, as a new airline we're still continuing to grow overall and look forward to expanding our network in major business and leisure travel destinations like Chicago." It will launch service to Chicago O'Hare from Los Angeles (twice-daily) and San Francisco (thrice-daily) from May 25.

The carrier, which operates 39 Airbus A320 family aircraft, said its fleet will nearly triple to 113 aircraft by 2019. VX earlier this yearplaced a firm order for 60 A320s including 30 A320neos (ATW Daily News, Jan. 19).

Full-year 2010 expenses rose 25.5% to $736.5 million, including a 65.3% leap in fuel costs to $246.7 million. VX's 2010 fuel expense was more than double any other of the company's cost categories. It said it has hedged 50% of its 2011 projected fuel requirements. Some 77% of its first-quarter requirements were hedged at an average crude oil price of $82 per barrel.

Operating loss for 2010 was $12.4 million, narrowed from an operating deficit of $39 million in 2009. 2010 traffic increased 15.1% year-over-year to 6.24 billion RPMs on a 16.9% rise in capacity to 7.65 billion ASMs, producing a load factor of 81.5%, down 1.3 points. Yield lifted 16.1% to 10.51 cents as RASM heightened 15.6% to 9.46 cents and CASM grew 9.7% to 9.62 cents. CASM ex-fuel lowered 2.1% to 6.4 cents.
​

http://atwonline.com/airline-finance-data/news/virgin-america-incurs-69-million-2010-net-loss-0424

 

[BRA]

Two weeks ago, I had a VA FO jumpseat and he said with all the deferral's of equipment, upgrade is now at 5-7 years at VA. He told me things aren't too pretty over there.

I've worked at 2 airlines and it is amazing how optimistic one guy can be and then the next day you fly with another guy and the sky is falling and we are all doomed.

 

[Fubijaakr]

I've worked at 2 airlines and it is amazing how optimistic one guy can be and then the next day you fly with another guy and the sky is falling and we are all doomed.

But facts, not opinions matter. Here are the facts:

1. VX has made money ONE quarter in 3 years.
2. VX is deferring airplanes.

Draw your own conclusions.