Dialled-back growth helps Virgin America finally swing to the black

Virgin America leapt out from the red during 2Q2013 to post a second quarterly profit in the company's five-year history. The swing to profitability is no doubt a relief to the carrier's management, which appears to be pressing forward with plans to take the company public.

The carrier turned a decent performance in operating metrics during 2Q2013 as yields and total unit revenues grew 1% and 7.8%, respectively. Top-line revenues increased 8% while overall expenses grew just 1%, helping Virgin America to reverse an operating loss of USD4.1 million during 2Q2012 and record a USD27.8 million operating profit for 2Q2013. At the same time its unit cost dropped 1.4%.

A return to profitability after a long hiatus (it was only profitable in one other quarter - 3Q2010) is a positive development for Virgin America, but a single quarter is far from constituting a trend, and given its consistent string of unprofitability the carrier still has somewhat of an uphill climb to prove it has staying power while building its liquidity. Virgin America still posted a USD37.5 million loss for 1H2013, which is a major improvement over the USD107 million loss for the year prior, but with a balance sheet restructure complete and a decision to put the brakes on growth, perhaps Virgin America finally has some financial stability within its sights.