Virgin America reports $69 million 2010 net loss

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Published: April 22, 2011

Virgin America A319. Photo: By Rob Finlayson.

Virgin America enjoyed its first profitable reporting period in the 2010 third quarter but was unable to sustain the momentum in the fourth quarter, posting a $ 25.1 million net loss, widened from an $ 18.8 million net deficit in the 2009 December quarter and pushing the company to a $ 68.7 million full-year net loss.

The 2010 deficit was narrowed from an $ 80.8 million net loss in 2009. The San Francisco-based carrier, which launched in August 2007, earned a $ 7.5 million net profit in the 2010 September quarter (ATW Daily News, Nov. 10, 2010). VX pointed to strong revenue growth in 2010 (up 32.2% compared to 2009 to $ 724 million) as evidence that it is progressing toward profitability, and noted that the year’s results were hurt by high fuel costs and severe winter storms in the US northeast.

“As a young airline still fueling growth, we continue to move in the right direction with our top line progress and revenue results, especially given the backdrop of global recession and an unprecedented run-up in oil prices since our 2007 launch,” President and CEO David Cush said in a statement issued Thursday. “We’re seeing strong revenue performance in 2011 and with industry capacity discipline we remain encouraged by the outlook. Oil prices remain a concern and as a result we plan to tap the brakes slightly on our 2012 growth plans. That said, as a new airline we’re still continuing to grow overall and look forward to expanding our network in major business and leisure travel destinations like Chicago.” It will launch service to Chicago O’Hare from Los Angeles (twice-daily) and San Francisco (thrice-daily) from May 25.

The carrier, which operates 39 Airbus A320 family aircraft, said its fleet will nearly triple to 113 aircraft by 2019. VX earlier this year placed a firm order for 60 A320s including 30 A320neos (ATW Daily News, Jan. 19).

Full-year 2010 expenses rose 25.5% to $ 736.5 million, including a 65.3% leap in fuel costs to $ 246.7 million. VX’s 2010 fuel expense was more than double any other of the company’s cost categories. It said it has hedged 50% of its 2011 projected fuel requirements. Some 77% of its first-quarter requirements were hedged at an average crude oil price of $ 82 per barrel.

Operating loss for 2010 was $ 12.4 million, narrowed from an operating deficit of $ 39 million in 2009. 2010 traffic increased 15.1% year-over-year to 6.24 billion RPMs on a 16.9% rise in capacity to 7.65 billion ASMs, producing a load factor of 81.5%, down 1.3 points. Yield lifted 16.1% to 10.51 cents as RASM heightened 15.6% to 9.46 cents and CASM grew 9.7% to 9.62 cents. CASM ex-fuel lowered 2.1% to 6.4 cents.  

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