Virgin $35 million Loss Skybus $16 million loss seeks pilot concessions

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VA just burned through what 20% of their startup capital?

I hope that dog and pony show that you Skybus guys bought regarding those " Initial Cadre Airmen Stock Grants " Didnt blind you from the obvious.


Skybus lost $16 million on operating revenue of $22 million during the quarter ending Sept. 30, The Columbus (Ohio) Dispatch reports. The quarter was the carrier's first full quarter of flying. "Company officials said they expected to lose money before becoming profitable sometime next year, while some analysts said this first look provided some troubling signs for the airline," the paper writes. Skybus spokesman Bob Tenenbaum tells the Dispatch that the results were "in line" with the company's expectations and notes the quarter covered a period in which Skybus was just beginning to fly and was in the middle of its big initial growth spurt.
But while nearly all start-up airlines are expected to lose money during their first several quarters of operation, some industry observers expressed concern. The Dispatch writes it talked to "two airline experts (who) expressed concern that Skybus' yields -- an industry benchmark that is calculated by dividing passenger revenue by passenger miles -- have been very weak." Those yields have already prompted Skybus to act. In October, the airline scrapped three of its five West Coast flights -– flights where the longer distances did not allow the carrier to generate enough additional revenue to offset the increased fuel and other costs associated with the cross-country routes.
The Dispatch says Skybus' passenger yield for the quarter came in at 5.08 cents. By comparison, the Dispatch says Southwest's passenger yield is 12.5 cents while the major carriers average 13 cents. "These are rock-bottom yields, especially in this age of skyrocketing fuel costs," Joseph Schwieterman, a DePaul University professor and former pricing analyst for United Airlines, tells the Dispatch. Aviation consultant Mike Boyd also echoed concerns to the Dispatch, saying "this is just not a very good plan, but that doesn't mean they can't turn it around by scrapping the model."

 

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Virgin America lost $35 million in first quarter of flying

Virgin America lost $35 million during its first quarter in business, the San Francisco Chronicle reports. The carrier reported an operating revenue of $16.2 million. "The figure was reported Monday on the Department of Transportation Web site and was confirmed by Abby Lunardini, spokeswoman for the airline that began service Aug. 8," the newspaper writes. But that result my not tell the full story. Lundardini points out that the figure –- which covers the quarter ending Sept. 30 –- includes 92 days of operating expenses but just 53 days of revenue. "You have incredibly high overhead costs when you start an airline," Lunardini says. "We did not expect to turn a profit this early in our plans," she explains to the Chronicle.
Lunardini says it's uncertain when the well-funded start-up might report its first profit, but she adds that "it is not likely to be anytime soon. Our shareholders are aware of that." Indeed, no one should be making too much of the fact that the carrier is not yet in the black, says industry analyst Henry Harteveldt of Forrester Research. "Anyone who looks at the (first quarterly) report and says the airline is failing is wrong, but I wonder if they are succeeding to the degree they anticipated," Harteveldt says to the Chronicle.
But Harteveldt seems to think Virgin America is on the right track by selecting former American Airlines executive David Cush to replace outgoing Virgin America CEO Fred Reid. Harteveldt says "I think having somebody of his caliber will provide guidance and discipline to make sure the airline narrows that gap between revenue and expenses. It's going to be awhile for Virgin America to be profitable, but Dave has the capability to shorten the time." As for Virgin America, spokeswoman Lunardini tells Dow Jones/CNN that "sales are beating our expectations."

 

[Publishers]

The difficulty in starting an operation today is so much greater than just 10 years ago. If anything, there is the JetBlue disease as really that is the airline of recent times where they were able to raise considerable money, had the Morris Air experience, and knew what product they wanted to come forth with./ The advantageous deal that they struck with Airbus, etc... allowed them to get going with new aircraft and to make a mark. That served to get the new Skybus, Virgin, and others going. Long gone are the days of a few used DC9's and we start on no capital and just industry impetus.