Virgin America 1Q loss deepens amid fuel, growth costs

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Published: July 4, 2012

Virgin America A319. By Rob Finlayson

Virgin America (VX) has reported a first-quarter operating loss of $ 49 million, a 65% worsening compared to the $ 29.5 million operating loss for the same period last year.

The carrier cited fuel costs that were 47% higher, costs associated with capacity growth, and a transition to a new reservations system as reasons for the loss.

Revenues grew 33% to$ 267 million from $ 201 million. The airline ended the quarter with $ 111 million in unrestricted cash. 

While capacity was up 29% year-over-year, the carrier pointed out that total capacity increases were up 59% over the past two years. “This rapid growth established Virgin America’s core network and provided an important base for the carrier’s future success. This planned phase of accelerated growth will wind down in mid-2012, until the airline’s next major fleet order begins delivery later in 2013,” said in a statement.   

“While we are disappointed that our operating results fell short of our expectations for the quarter, as a young airline we have to balance the need to grow in order to build our network and achieve economies of scale with the short-term costs of that growth,” VX president and CEO David Cush said.  

The carrier grew its fleet from 38 to 51 aircraft in the quarter and said it expects to see an improved financial performance during the next year as newer markets mature.

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