13-Jun-2011 12:13 PM

Virgin America reports operating loss in 1Q2011; revenue improvements seen

Virgin America stated (10-Jun-2011) that "against the headwinds of significantly higher fuel prices and the resumption of its rapid growth", Virgin America reported a USD29.5 million operating loss in the three months to Mar-2011 (1Q2011) with its operating margin remaining steady at (14.7%). The airline reported revenues of USD201 million, a 37% year-on-year increase.  The carrier continued to deliver significant unit revenue performance even as it ramped up in new markets, with a 12% improvement in revenue per available seat mile (RASM) year-over-year, in  a period in which the domestic industry’s RASM increased by 10 percent. The airline’s mature capacity RASM growth exceeded this, with performance in the carrier’s established markets improving by 20% year-over-year. During the quarter, the carrier’s scheduled capacity increased by 23%, compared to the domestic industry’s average capacity increase of 1% for the same period. The airline stated it has seen "significant" year-over-year increases in traffic, bookings and average fares in 2Q2011. Meanwhile, in response to the challenging fuel environment, Virgin America continued to hedge to help manage volatility. The airline hedged 50% of its 2011 projected fuel requirements, with 77% of its 1Q2011 requirements hedged at an average crude oil call strike price of USD82 per barrel. The carrier plans to growth its fleet from 35 aircraft during 1Q2011 to 52 aircraft by 2Q2012. [more]

Virgin America: “Despite the financial challenges of growth and rising fuel costs in the first quarter, we remain pleased with our revenue performance and overall progress as a young airline in a significant growth phase. While we are disappointed that our operating results fell short of our expectations primarily due to fuel prices, we are encouraged that we were able to recover over half of the sharp fuel increase through revenue gains. Our strong sales performance and recent expansions to major business and leisure destinations such as Dallas-Fort Worth and Chicago forecast a strong overall picture for 2011 and beyond...As a young airline, we must balance the need for expansion against the financial pressures that accompany growth. Adding service to four new cities during a short window is no small task for a new airline. However, our Company and teammates rose to the challenge and performed well – and our new markets continue to mature quickly. Our strong revenue performance, consumer enthusiasm for our unique product and the cost leverage we continue to gain from scale as we grow, will allow us to keep building a successful airline as we emerge from our current growth cycle," David Cush, President and CEO. Source: Company Statement, 10-Jun-2011.

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