Virgin America reduces losses in difficult 1Q2014, now needs to leverage new slot assets

Virgin America stands to become one of the biggest beneficiaries of US consolidation after securing slots at New York LaGuardia, Washington National and gates at Dallas Love Field. The airline's pursuit and purchase of access to those airports was made possible following a settlement between American Airlines and the US Department of Justice in order to allow American and US Airways to close their merger.

Among the carriers that gained slots at airports where American was required to divest, (Southwest at Washington National and LaGuardia, JetBlue at National), perhaps Virgin America has the most to prove with its newly acquired assets. As the airline gears up for new service launches in key business markets, it posted a loss for 1Q2014, which calls into question the viability for Virgin America's consistent profitability.

Virgin America did narrow its losses year-on-year during 1Q2014, a tough quarter for most US airlines as winter storms pummelled much of the country. But the airline recorded declines in key metrics including unit revenue and yield and increases in unit costs. Its performance in those fundamentals does not bode well for Virgin America's attempts to generate excitement for a potential initial public offering during 2014.