Virgin America reports first quarterly profit
While it is continuing to gain rave reviews from travel bloggers, Virgin America earned its first quarterly profit in the 3Q2010 at USD7.5 million, a 225.9% positive swing from the USD5.9 million loss in the 2009 third quarter. At the same time, it reported a record operating profit of USD21 million, a 314% improvement from 3Q2009 which resulted in a 10.4% operating margin. In the 2009 quarter its margin was only 3.2%.
Revenues reached USD202 million, up 28%, according to the privately held airline which is not required to report out its financial statistics. Meanwhile, unit revenues experienced a 17% increase to USD 10.37 cents, besting industry unit revenue growth which came in at 10% in the quarter. The airline also reported that the airline's stage-length-adjusted passenger unit revenue grew 23%.
Yield per passenger mile was USD 11.20 cents, a rise of 20% compared with 3Q2009 while passenger revenue per available seat mile jumped 16.4% to USD 9.44 cents. The airline cited rising fuel costs but noted hedging strategies achieving a USD82 per barrel call price.
The carrier echoed its US airline counterparts in seeing strong 4Q2010 revenue performance. President and CEO David Cush was encouraged by the outlook. Significant increases in bookings and average fares are expected in the fourth quarter, he said. The carrier intends to continue its growth with four new destinations in 2010 and new service to Dallas-Fort Worth, Los Cabos in December and Cancun in January.
"As a young airline fueling growth in a tough economic climate, we're exceptionally pleased with our performance to date," said Cush. "Although the revenue climate improved as a whole during the quarter, our unit revenue performance still outpaced much of the industry. Our progress toward profitability in just our third year of operations remains impressive, especially given both a global recession and a historic run-up in oil prices since our August 2007 launch. The credit is due to a growing base of flyers who expect more from an U.S. airline - and our teammates, who continue to deliver the best service and product in the industry."
Revenue passenger miles rose 7% to 1.6 million on a 10% increase in capacity to 1.9 million during the quarter resulting in an 84% load factor, a two-point decline from 3Q2009. The average stage length rose 10.1% to 1592 miles for the 28 aircraft in service. Fleet utilisation rose 7.5% to 12.9 hours daily. Enplanements dropped 3.6% to 992,194. Its average fare rose 33.1% to USD185.30.
Along with its peers, Virgin America is managing its costs with CASM ex-fuel increasing 4.7% to 6.25 cents during the quarter on fleet and personnel investments, said the airline. However, ex-fuel CASM year to date is 4% lower than in the comparable 2009 period. CASM otherwise rose 8.1% to USD 9.29 cents. Total operating expenses rose 18.1% to USD181 million on revenues of USD202 million.
Virgin American ended the quarter with USD100 million in total liquidity, a quarter of which was in unrestricted cash.
Other revenues rose 25.3% to USD18,147.