Virgin America (San Francisco) today announced plans to significantly expand its Dallas presence by operating new daily nonstop flights from Dallas’ Love Field (DAL) to New York’s LaGuardia Airport (LGA), Ronald Reagan Washington National Airport (DCA), Los Angeles International Airport (LAX), San Francisco International Airport (SFO) and Chicago O’Hare International Airport (ORD). In addition to adding new service from Love Field to major business destinations such as New York, Washington D.C. and Chicago, the airline plans to increase flights to current destinations (San Francisco and Los Angeles) from Dallas. Virgin America is seeking to secure two Love Field gates in order to expand flight options for Dallas travelers, as the airport’s centralized location makes it a more convenient choice for Dallas-based and Dallas-destined business travelers. If successful, the airline would move its current operations from Dallas-Fort Worth International Airport (DFW) to Love Field in October 2014. Virgin America would be the only carrier at Love Field to offer guests three classes of service, WiFi, in-seat power outlets and touch-screen seatback entertainment (including live TV) on every flight. In addition, the airline operates a new fleet of Airbus A320-Family aircraft, which are significantly quieter than the commercial aircraft currently in use at Love Field.
Virgin America’s ability to offer these new flights to Dallas travelers is contingent on obtaining two Love Field gates that are being divested by American Airlines as part of the U.S. Department of Justice (DOJ) settlement agreement resolving American Airline’s merger with US Airways. As part of the merger settlement, DOJ required the divestiture of gates at several domestic airports to facilitate entry and expansion by low-cost airlines, where consumer competition could be negatively impacted by the unprecedented consolidation this latest merger represents. Virgin America’s new flights from Dallas would provide vigorous competition in a market where at present one carrier controls 80 percent of the gates at Love Field (16 of 20 gates). Earlier this year, Virgin America invested in divestiture assets being sold as part of the merger settlement, including 12 airport slots at LGA (six slot pairs) and eight slots at DCA (four slot pairs), both airports where legacy carriers have historically dominated operations and where consumers have suffered from lack of service competition and higher fares as a consequence. With the planned divestiture of Love Field gates, Virgin America would be able to offer Dallascustomers a competing network of flights to large business markets from Love Field.
The Love Field plans would significantly expand Virgin America’s presence in Texas, which now consists of three daily nonstop flights from both LAX and SFO to DFW as well as its popular SFO-Austin flights. In addition, the new routes would expand the airline’s presence in both Washington D.C. and the New York area. The carrier will be only the second low-cost airline to serve all three major New York-area airports. Virgin America has built a loyal following of bi-coastal flyers with its nonstop flights from LAX and SFO to New York’s John F. Kennedy International Airport (JFK) and EWR.
Virgin America’s service to and from DAL would begin from October 2014, after the expiration of the Wright Amendment, which has restricted flights at Love Field since 1979. The airline would plan to operate daily nonstop flights from October 2014 and would announce full schedules for the following routes should the Love Field gates be approved:
DAL to LGA (four roundtrip flights a day).
DAL to DCA (four roundtrip flights a day).
DAL to LAX (three roundtrip flights a day, expanding to four in 2015).
DAL to SFO (three roundtrip flights a day, expanding to four in 2015).
In addition, the airline would add two roundtrip flights a day from DAL to Chicago O’Hare in early 2015.
Top Copyright Photo: Michael B. Ing/AirlinersGallery.com. Airbus A319-112 N524VA (msn 3204) “Dark Horse” approaches the runway at Los Angeles International Airport.
Bottom Copyright Photo: Bruce Drum/AirlinersGallery.com. The move by Virgin America to offer their highly-rated services at Love Field brings back memories of short-lived Legend Airlines (please click on the photo for additional information).
Virgin America (San Francisco) today reports its financial results for the second quarter of 2013 with operating income of $27.9 million and net income of $8.8 million on total revenue of $376 million for the three months ending June 30. The airline posted an 8.6 point improvement in operating margin for the second quarter, driven largely by a 7.8 percent growth in revenue per available seat mile (“RASM”) over the year-earlier period.
Second Quarter 2013 Financial Highlights
Virgin America reported $8.8 million in net income compared to a year-ago loss of $31.8 million, an improvement of more than $40 million.
The Company significantly outpaced all U.S. carriers with year-over-year RASM growth of 7.8 percent on flat capacity. Virgin America has now led the industry in RASM growth in each of the past three quarters.
Load factor increased by four points and yield increased by one percent year-over-year.
Operating revenue was $376 million, an increase of 8 percent from the second quarter of 2012.
Cost per available seat mile (CASM) excluding fuel increased by just 1.8 percent year-over-year.
Earnings before interest, taxes, depreciation and amortization, and aircraft rentals (“EBITDAR”) increased 52 percent to $82.6 million from $54.4 million in the same period a year-ago.
Year-to-date, Virgin America has generated an operating income of $12.9 million, its first-ever cumulative operating profit for the first and second quarters, and an increase of $65.6 million from the first six months of 2012.
Unrestricted cash was $148.2 million as of June 30, 2013, an increase of $90 million since March 31, 2013.
“Our first ever second-quarter net profit and year-to-date operating income show that our company is now poised to produce meaningful profitability,” said David Cush, Virgin America’s President and CEO. “As we have reduced our growth from the 30 percent-plus level of the past few years to a more sustainable rate, our network has begun to mature into a profitable one, and our markets continue to show industry-leading RASM growth. We have always said that once people fly with us, they stick with us, and the second quarter is a testament to that and to the hard work of our team.”
Virgin America completed a major two-year growth phase during 2012, having taken delivery of 24 aircraft between the second quarter of 2010 and the second quarter of 2012, almost doubling the size of the fleet. With this major growth phase largely behind the Company, Virgin America is now experiencing improved revenue and profitability performance across its network. Virgin America took delivery of one aircraft in the first quarter of 2013, increasing its total operating fleet to 53 aircraft. The Company does not plan to increase its fleet size again until the second half of 2015, when aircraft on order from Airbus are scheduled for delivery. The Company expects continued strong improvement in year-over-year financial performance through the remainder of 2013.
The Company completed a restructuring of the majority of its debt with investors during May 2013, eliminating more than $300 million of existing debt and accrued interest. As a result of this restructuring, Virgin America expects its interest expense to substantially decline in the second half of 2013 and beyond, to approximately $10 million per quarter. Had the May 2013 restructuring been completed prior to the beginning of the second quarter, Virgin America’s net income would have been approximately $18 million for the quarter. Year-to-date, Virgin America’s net loss would have been approximately $8 million after taking into account the impact of the restructuring. In addition, Virgin America completed a debt offering in May, raising $75 million. Combined with $15 million of positive cash flow during the quarter, this increased the Company’s unrestricted cash by $90 million, to $148.2 million.
In the second quarter of 2013, the airline brought a small number of strategically important new markets online by reallocating capacity from existing markets. In early April, the carrier inaugurated new nonstop service from both Los Angeles International Airport (LAX) and San Francisco International Airport (SFO) to Newark Liberty International Airport (EWR), an important destination for business travelers. Also in April, the airline inaugurated new nonstop service between Los Angeles and Las Vegas McCarran International Airport (the carrier already served Las Vegas from both San Francisco and New York John F. Kennedy International Airport). In May, the airline launched Norman Y. Mineta San Jose International Airport to LAX service, expanding its Northern California footprint beyond its San Francisco home base. Later in May the airline inaugurated daily flights from San Francisco to Austin-Bergstrom International Airport. In June, the carrier launched new summer seasonal service between San Francisco and Alaska’s Ted Stevens Anchorage International Airport.
The addition of three daily roundtrip flights between Newark and both San Francisco and Los Angeles significantly expanded Virgin America’s presence in the New York and New Jersey area. The airline had already built a following of bi-coastal flyers with its popular nonstop flights from both LAX and SFO to JFK. In three months of operations, the Newark flights are performing ahead of the Company’s forecasts, and Virgin America is achieving a revenue share in excess of its share of capacity in both markets. With the addition of Newark, Virgin America now serves nine of the top 10 business markets from SFO and eight of the top 10 business markets from LAX. Virgin America is the only airline serving the Newark-West Coast routes to offer WiFi, power outlets and live satellite TV at every seat on every flight.
Prior to Virgin America’s entry, the San Francisco-Newark route was a monopoly route and the Los Angeles-Newark route was not served by any low-fare carriers. As a result, flights between Newark and San Francisco had some of the highest average fares of any domestic US route. After Virgin America announced plans to enter the Newark market in late 2012, fares for flights between Newark and California’s two largest airports dropped by as much as one-third and the market size has grown by 75 percent in EWR-SFO and doubled in EWR-LAX.
Key milestones achieved in the second quarter of 2013 include:
In its first year of eligibility, Virgin America in April topped the Airline Quality Rating, an annual study of airline industry performance conducted by Wichita State University and Purdue University.
Virgin America brought its Sharklet-equipped “Jersey Girl,” its 53rd Airbus A320-family aircraft, into service.
In April, Virgin America inaugurated service between Newark , N.J. and Los Angeles and San Francisco.
In April, the carrier also expanded service to Las Vegas with three daily flights to Los Angeles.
In May, Virgin America was voted “Best Airline” in a survey by Consumer Reports.
Virgin America began service between Los Angeles and San Jose, California on May 1.
Also in May, the carrier launched new flights from San Francisco to Austin, Texas.
Virgin America began seasonal service between San Francisco and Anchorage, Alaska in June.
In the second quarter, the carrier added three new interline partners: China Eastern Airlines, Etihad Airways and Scandinavian Airlines (SAS). By the end of the second quarter 2013, Virgin America had 26 interline partners, up from eight in the same in period in 2012.
The airline’s baggage handling rate was 0.89 mishandled baggage reports per 1,000 guests in April and 1.15 mishandled baggage reports per 1,000 guests in May, placing it first among all U.S. carriers reporting to the Department of Transportation (DOT) for baggage reliability.
In June, the carrier began releasing monthly operating results, consistent with the practice of publicly traded airlines.
Since its launch in 2007, Virgin America has created 2,600 new jobs and now flies to San Francisco, Los Angeles, New York, Newark, Washington D.C. (IAD and DCA), Las Vegas, San Diego, Seattle, Boston, Fort Lauderdale, Orlando, Dallas-Fort Worth, Los Cabos, Cancun, Chicago, Puerto Vallarta, Palm Springs (seasonal), Philadelphia, Portland, San Jose, Austin and Anchorage (seasonal).
Copyright Photo: Brian McDonough/AirlinersGallery.com. Virgin America’s Airbus A319-112 N524VA completes its final bank on its River Approach into Washington’s Reagan National Airport. Technically the “Washington DC (Va) 19-1 River Approach (visual) is conducted when weather is 3500′ and 3 miles or better. Radar vectors are provided for the final approach course. When cleared for a River Approach, aircraft may visually follow the river to the airport or may proceed via the DCA R-328 (148 degree inbound) or via the LDA Runway 18 approach to abeam Georgetown Reservior or the DAC 4 DME fix, then visually follow the river to the airport. A light on Memorial Bridge is installed to assist pilots in staying over the Potomac River during approaches from the northwest” according to a guide published by Boeing.