Virgin America may seek public offering next year, CEO says

[Grandpa +65]

Bloomberg News
10:17 AM PDT, May 4, 2012

Virgin America Inc., the low-fare airline partly owned by U.K. billionaire Richard Branson, may seek an initial public offering of shares next year should market conditions continue to improve.

"We'll be prepared by 2013" to do an IPO, Chief Executive David Cush said in an interview.

The timing depends on the carrier's ability to generate a consistent profit and "present a compelling case for our long-term business model," and on investors' appetite for IPOs, Cush said.

"We're not tied to any date, and we've got investor patience and sufficient liquidity," Cush said.

He added that Virgin America expects to have an operating profit this year and margins that are in the "top half of the industry" in 2013.

The Burlingame, Calif.-based carrier on Friday posted a net loss of $30.8 million for the fourth quarter, wider than the $25.1 million loss a year earlier, as its jet-fuel bill surged 77% to $111 million. Revenue rose 45 percent to $276.8 million as the carrier added planes and routes.

Virgin America, which started service in August 2007, has a fleet of 51 Airbus SAS A320 jets and flies to cities including San Francisco, Los Angeles, Las Vegas, New York and Boston.

Copyright © 2012, Los Angeles Times


http://www.latimes.com/business/la-fiw-virgin-america-20120504,0,2782426.story

 

[ackattacker]

Bloomberg News
10:17 AM PDT, May 4, 2012

Virgin America Inc., the low-fare airline partly owned by U.K. billionaire Richard Branson, may seek an initial public offering of shares next year should market conditions continue to improve.

"We'll be prepared by 2013" to do an IPO, Chief Executive David Cush said in an interview.

The timing depends on the carrier's ability to generate a consistent profit and "present a compelling case for our long-term business model," and on investors' appetite for IPOs, Cush said.

"We're not tied to any date, and we've got investor patience and sufficient liquidity," Cush said.

He added that Virgin America expects to have an operating profit this year and margins that are in the "top half of the industry" in 2013.

The Burlingame, Calif.-based carrier on Friday posted a net loss of $30.8 million for the fourth quarter, wider than the $25.1 million loss a year earlier, as its jet-fuel bill surged 77% to $111 million. Revenue rose 45 percent to $276.8 million as the carrier added planes and routes.

Virgin America, which started service in August 2007, has a fleet of 51 Airbus SAS A320 jets and flies to cities including San Francisco, Los Angeles, Las Vegas, New York and Boston.

Copyright © 2012, Los Angeles Times


http://www.latimes.com/business/la-fiw-virgin-america-20120504,0,2782426.story

They lost $100 million last year. Worse than 2010. To date they've lost something along the lines of $460 million. What part of the "market conditions" is improving?

 

[Grandpa +65]

They lost $100 million last year. Worse than 2010. To date they've lost something along the lines of $460 million. What part of the "market conditions" is improving?

ouch!

 

[tzskipper]

http://finance.yahoo.com/news/virgin-america-reports-fourth-quarter-170000933.html

 

[ualdriver]

I don't get it. You read the financial statements then you read the press releases, and I am thinking to myself WTF am I missing? They had a net loss of 100M on 1B in revenue for their year ended DEC 2011 when even the legacies made money. This was a bigger net loss than the net loss than last year. What exactly is a future shareholder buying in this "big" upcoming IPO?

Well, at least some decent airlines will be hiring soon for the VA guys that want to bail.

 

[tzskipper]

I don't get it. You read the financial statements then you read the press releases, and I am thinking to myself WTF am I missing? They had a net loss of 100M on 1B in revenue for their year ended DEC 2011 when even the legacies made money. This was a bigger net loss than the net loss than last year. What exactly is a future shareholder buying in this "big" upcoming IPO?

Well, at least some decent airlines will be hiring soon for the VA guys that want to bail.

I would guess that the debt that is being serviced (assuming the debt service is the difference between the operating profit/loss and the net profit/loss), is that from investment and will be paid down or off as a result of a IPO. This would mean that the operating profit/loss probably paints a more accurate picture of what the airline's results may indicate, post IPO.

S

 

[Blue Dude]

The company simply doesn't make any money. VA had to borrow cash just to keep operating. Almost all their cash, "a high point for liquidity in Virgin America's history", came from a new credit line. They have yet to make dime one on operations, much less the entire business. An IPO would only be a cynical tactic under the greater fool theory to bail out the initial investors who frankly couldn't extract their original investment any other way, much less a return. Their only hope is to stay alive long enough to dazzle small investors in an IPO, who will promptly begin to eat VA's losses. Nice.

 

[ackattacker]

They are not close to an IPO, despite what their talking head says.

In order for an IPO to work for them, they'd need to price for an initial market cap of close to $1 billion just for the initial investors to get out gracefully without taking a loss.

By comparison, JetBlue has a market cap of $1.36 billion and is more than 3 times the size, and is consistently profitable.

Even if they make money in 2012, there is just no way VX going to have an IPO in 2013.

 

[Flyer1015]

The numbers quoted by the LA times are inaccurate.

SAN FRANCISCO, May 4, 2012 /PRNewswire/ -- Virgin America today reported its financial results for the fourth quarter of 2011 and full year 2011. Despite substantially higher fuel costs and financial pressures associated with industry-leading capacity growth, the airline narrowed its fourth quarter operating loss to $8.1 million (a 29 percent year-over-year improvement) and its fourth quarter margin to (2.9 percent) – an improvement of three points year-over-year. The airline's full year operating loss was $27.4 million on revenues of over $1 billion. Top line growth remained strong with revenue gains significantly outpacing capacity growth. Year-over-year, revenue grew by 45 percent for the fourth quarter and 43 percent for the full year on a 29 percent increase in capacity – compared to an industry average capacity growth rate of less than one percent in 2011. The airline ended 2011 with $160 million in unrestricted cash.

 

[ackattacker]

The numbers quoted by the LA times are inaccurate.

SAN FRANCISCO, May 4, 2012 /PRNewswire/ -- Virgin America today reported its financial results for the fourth quarter of 2011 and full year 2011. Despite substantially higher fuel costs and financial pressures associated with industry-leading capacity growth, the airline narrowed its fourth quarter operating loss to $8.1 million (a 29 percent year-over-year improvement) and its fourth quarter margin to (2.9 percent) – an improvement of three points year-over-year. The airline's full year operating loss was $27.4 million on revenues of over $1 billion. Top line growth remained strong with revenue gains significantly outpacing capacity growth. Year-over-year, revenue grew by 45 percent for the fourth quarter and 43 percent for the full year on a 29 percent increase in capacity – compared to an industry average capacity growth rate of less than one percent in 2011. The airline ended 2011 with $160 million in unrestricted cash.

The numbers the LA times quoted ARE accurate, they are straight from the VX financial statement!

"Operating loss" is not the same things as "net loss". The difference between the two is "nonoperational expense" which can include many things, but the biggest driver of nonoperational expense is probably "Long-term Debt and Capital Leases", essentially interest payments. The fact that this number was $73 million for 2011 gives you an idea of how much debt they are carrying.