Virgin America reported a $12 million operating loss

[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.

 

[NEDude]

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.

Calling BS.

The so-called 'deferrals' were only announced at the end of last week, not two weeks ago. As previously posted, they are not really deferrals, they are not taking the available options they have - all of the committed aircraft are still coming on schedule. This committed schedule was presented to the company last July. So from what the company presented as a committed delivery schedule for 2011-2013 has not changed since July of last year. Upgrades are running at just under 3 years. A person hired in the past year is looking at around 3-4 years based on the still committed delivery schedule.

You may have had someone who is not happy, but overall this is a very happy group.

 

[NEDude]

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.

Here are more facts (it usually helps to have all the facts when having a discussion - omitting the ones that contradict your believe is not good form):

1. Virgin America is adding seven more airplanes between now and the end of 2011.*

2. Virgin America is adding five more aircraft in 2012.*

3. Virgin America has ordered 60 new airplanes starting delivery in August 2013.

4. Virgin America has just entered into a new contract with CAE to build a training center in SFO.

5. Virgin America just announced a second pay raise for the pilot group in just over a year.

6. Virgin America's 'unrestricted cash' grew 20% from the end of Q3 2010 and the end of Q4 2010 ($25 million to $30 million).

* - These are on par with the 'All Hands Meeting' presentation from July of last year. I have the slide saved on my computer from that presentation, and this is exactly what it showed. In other words there is no change from what the company had as a committed plan since at least last July.

Now, all of that being said, the finances are a concern, there is no question about that. There is a new article in Aviation Week today where the CEO states that the company will need a cash infusion if oil prices remain high. So we are not out of the woods, not by a long shot. But contrary to what many would have you believe, we are not on our death bed, and things are not gloomy here.

And the last fact, that nobody here can deny, is that none of us know the mindset of the board of directors. This is a privately held company, and the investors only have to answer to themselves. The decision to grow, shrink or pull the plug is their decision alone - it is not a blogger for Bloomberg, it is not an independent aviation analyst, and it is not some pilot for Alaska Airlines. And anyone who is not on the board of directors or in upper management who claims to know what the mindset of the investors is full of it.

 

[Fubijaakr]

How many failed airlines have you worked for? I bet you thought USA3000 would make it too.

 

[OUPilot]

I don't have a dog in this fight, but Skybus had firm orders when they ceased operations. I know people over there so I hope it works out, but you can't judge anything by orders.

 

[Fubijaakr]

I don't have a dog in this fight, but Skybus had firm orders when they ceased operations. I know people over there so I hope it works out, but you can't judge anything by orders.

Amen. Alaska was the launch customer for the MD-90. Not one MD-90 was ever flown by Alaska Airlines.

There is no such thing as a "firm" order. Until the airplane is on the ramp and the logbooks are inside, its all prospective.

 

[SMcC]

Virgin America is way, way, way beyond the level Skybus reached before their demise. Comparing Virgin America to Skybus at this point would be like comparing Ford Motor to Tucker.

 

[NEDude]

How many failed airlines have you worked for? I bet you thought USA3000 would make it too.

What does that have to do with anything regarding Virgin America?

Oh yeah, nothing but flamebait.

 

[NEDude]

I don't have a dog in this fight, but Skybus had firm orders when they ceased operations. I know people over there so I hope it works out, but you can't judge anything by orders.

True, but Skybus operated for a grand total of less than eleven months and had 12 airplanes. All of its orders came prior to the start of operations. It was not around to order 60 airplanes nearly 3 1/2 years into operation like Virgin America just did. The Skybus comparisons are a bit of a stretch at this point. Even Independence Air operated only 20 months after its rebranding. At this point Virgin America has operated nearly four times as long as Skybus, and more than twice as long as Independence Air.

Regarding those two airlines - there were far more warning signs about their impending demise than what comes close to Virgin America. Independence started having aircraft repossessed less than a year into operations. At Skybus, the company was in trouble almost from the get go, the company founder resigned that day after operations began. As I pointed out, neither of those airlines were ordering 60 airplanes 3 1/2 years into operations. Neither of those two airlines were adding destinations 3 1/2 years into operations.

For the record - I am not predicting the ultimate success or demise of Virgin America. It very well may fail, and there is cause for worry. But comparing Virgin America to two airlines who lasted less than half the time, in different markets is an invalid comparison.

 

[curtaindriver]

True, but Skybus operated for a grand total of less than eleven months and had 12 airplanes. All of its orders came prior to the start of operations. It was not around to order 60 airplanes nearly 3 1/2 years into operation like Virgin America just did. The Skybus comparisons are a bit of a stretch at this point. Even Independence Air operated only 20 months after its rebranding. At this point Virgin America has operated nearly four times as long as Skybus, and more than twice as long as Independence Air.

Regarding those two airlines - there were far more warning signs about their impending demise than what comes close to Virgin America. Independence started having aircraft repossessed less than a year into operations. At Skybus, the company was in trouble almost from the get go, the company founder resigned that day after operations began. As I pointed out, neither of those airlines were ordering 60 airplanes 3 1/2 years into operations. Neither of those two airlines were adding destinations 3 1/2 years into operations.

For the record - I am not predicting the ultimate success or demise of Virgin America. It very well may fail, and there is cause for worry. But comparing Virgin America to two airlines who lasted less than half the time, in different markets is an invalid comparison.[/QUOTE

Dude, don't feel like you have to defend your company to anyone, especially on FI. I don't know why people want to see another airline fail. There are so many stories of ruined careers it doesn't make sense to wish for more. You guys seem to run a good airline. Besides, Skybus started their operation from Columbus, OH.......enough said. And if oil keeps climbing and climbing, we are all in trouble.
Good luck, fly safe.

CD

 

[Lake Alice]

Pilots dislike VA for the same reason Jetblue was hated years ago. The pay and benefits are pathetic. Jebtlue was able to fix some of those issues. VA still has a long way to go. In the end airlines that can't be competitive in compensation and benefits are bad for all of us.