Virgin America slows growth in an effort to forge elusive profitability

After recording the latest in a string of quarterly losses, Virgin America has declared its intent to slow growth as part of a strategy to achieve profitability, which has eluded the carrier throughout its five-year existence. Earlier predictions by senior management of recording an operating profit for 2012 seem to be fading as Virgin America posted a USD53 million operating loss for 1H2012. The easing of its rapid growth could be a last-ditch effort to gain financial strength as patient investors wait for returns.

Virgin America has only recorded a single quarter of profitability - 3Q2010 - when the carrier recorded net income of USD7.5 million. It recorded a USD100 million net loss in 2011, when the majority of its US carrier counterparts attained profitability as oil prices neared the record highs set in 2008.

During 2Q2012, the carrier narrowed its operating loss to USD4 million from USD6 million the year prior, but its net loss widened by 46% to USD32 million. For 1H2012, Virgin America's net loss widened by 64% from USD66 million to USD108 million while its operating loss widened by 48% year-over-year from USD35 million to USD53 million.