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Virgin America narrows its first quarter net loss

Virgin America (San Francisco) today reported its financial results for the first quarter of 2014. The company reported a net loss of $22.4 million for the quarter, compared to a net loss a year ago of $46.4 million, resulting in a $24.0 million year-over-year improvement.

The airline continued:

The airline significantly narrowed its net loss from the same period in 2013 with a 51.8 percent year-over-year improvement.

First Quarter 2014 Financial Highlights

Operating Revenue: Total operating revenue of $313.4 million, an increase of 4.0 percent over the first quarter of 2013.

Revenue per Available Seat Mile (RASM): RASM increased 0.9 percent, to 11.28 cents. Year-over-year

RASM growth was impacted by the Easter and Passover travel peaks shifting to April in 2014 (in 2013, these holidays fell earlier in the year), as well as a more than four-fold increase in the percentage of cancelled flights from the year earlier period due to severe winter weather in 2014 – including a significant number of cancellations during the busy, high-RASM Presidents’ Day holiday travel period.

Cost per Available Seat Mile (CASM): Total CASM increased 0.2 percent, to 11.76 cents. CASM excluding fuel costs increased 2.4 percent year-over-year, to 7.59 cents. CASM was negatively impacted by the high level of cancellations, as well as a 6.9 percent decrease in average stage length.

Operating Loss: First quarter 2014 operating loss of $13.1 million was a $1.9 million improvement over

Virgin America’s operating loss in the year prior. Operating margin improved by 0.8 percent year-over-year.

Net Loss: $22.4 million net loss for the quarter, compared to a net loss a year ago of $46.4 million, resulting in a $24.0 million year-over-year improvement.

Capacity: Available seat miles (ASMs) increased 3.0 percent year-over-year. The airline ended the quarter with 53 aircraft.

Liquidity: Unrestricted cash was $132.9 million as of March 31, 2014, an increase of $74.8 million since March 31, 2013.

Executive Commentary

“Given our network’s focus on trans-continental flying to the East Coast and with 30 percent of our revenue generated by New York markets alone, we bore the brunt of this year’s winter storms with a significant increase in cancellations. Yet despite the challenging operating and financial environment brought on by the severe winter weather and a shift in holiday travel, Virgin America improved its year-over-year net results in the first quarter,” said David Cush, Virgin America’s President and Chief Executive Officer. “With our first full year of net income in 2013, this marks the sixth straight quarter that we have delivered improved year-over-year financial results. In addition, our continued sweep of the major travel awards remains a testament to the work of our 2,800 teammates who consistently deliver the best product in the skies – despite the tough operating conditions for the quarter.”

In March, the California-based airline reported fourth quarter results and its first-ever full year profit in 2013, with a net income of $10.1 million, an improvement of $155.5 million over 2012. Total operating revenue for 2013 was $1.4 billion, a $91.8 million increase and 6.9 percent improvement over 2012. Virgin America achieved the highest year-over-year percentage increase in RASM of all major U.S. airlines in 2013.

Acquisition of Strategic Assets

As of the first quarter of 2014, Virgin America had finalized the purchase of slot assets at Washington Reagan National Airport (DCA) and at New York’s LaGuardia Airport (LGA) that became available as part of the U.S. Department of Justice (DOJ) settlement agreement resolving American Airline’s merger with US Airways. With the further acquisition of new gates at Dallas’ Love Field (DAL) which were made available in the same settlement process and with the support of Dallas consumers and local leaders, the airline will launch four new daily nonstop flights from DAL to LGA, three daily nonstop flights from DAL to DCA, and three daily nonstop flights from both Los Angeles International Airport (LAX) and San Francisco International Airport (SFO) to DAL as of October 2014. These acquisitions will allow Virgin America to significantly strengthen its network. The airline will be the only carrier at Love Field to offer a consistent, upscale product on every flight — with three classes of service, WiFi, in-seat power outlets, confirmed seating and touch-screen seatback entertainment available for every guest. Virgin America will be the second low-cost airline to serve all three major New York-area airports. In addition, the airline closed and funded a $40.0 million financing facility with two major banks early in the second quarter of 2014 to finance these slot purchases and further increase unrestricted cash.

Read the analysis by Bloomberg Businessweek: CLICK HERE

Copyright Photo: Jay Selman/AirlinersGallery.com. Airbus A320-214 N633VA (msn 3230) approaches the runway at John F. Kennedy International Airport (JFK) in New York City.

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