Published on : Wednesday, November 13, 2013
Virgin America today reports its financial results for the third quarter of 2013 with operating income of $44.4 million and net income of $33.5 million on total revenue of $387.3 million. The airline posted an operating margin of 11.5 percent — a 7.2 point improvement for the third quarter, driven largely by a 9.4 percent growth in revenue per available seat mile (“RASM”) over the year-earlier period.
Third Quarter 2013 Financial Highlights
Virgin America reported $33.5 million in net income compared to a year-ago loss of $12.6 million, an improvement of $46 million.The Company significantly outpaced all U.S. carriers with year-over-year RASM growth of 9.4 percent on a 3.9 percent decrease in capacity. Virgin America has now led the industry in RASM growth every month since October 2012.
Load factor increased by 0.9 points and yield increased by 7.4 percent year-over-year.
Operating revenue was $387.3 million, an increase of 5.2 percent from the third quarter of 2012.Cost per available seat mile (CASM) excluding fuel increased by 4.5 percent year-over-year, largely due to the airline’s expansion into major airports like Newark Liberty International Airport (EWR), increased labor costs, and decreased utilization of the fleet as part of the Company’s plan to improve unit revenue.
Year-to-date, Virgin America has generated operating income of $57.3 million, an increase of $94.1 million from the first nine months of 2012.Unrestricted cash was $156.9 million as of September 30, 2013, an increase of $80.9 million since December 31, 2012.
“Our strong financial results demonstrate the success of a series of strategic initiatives that started in late 2012. Reduced capacity growth, a focus on increasing unit revenue, and changes to our capital structure are all contributing to improving results. Although the industry overall is trending in a positive direction, it is notable that Virgin America has consistently led the U.S. industry in RASM growth over the past year. With the leading product in the domestic skies, we are well-positioned to continue building on these results in 2014 and beyond,” said David Cush, Virgin America’s President and CEO.
Since taking a pause in its fleet and network expansion, 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 again until the second half of 2015, when aircraft on order from Airbus are scheduled for delivery.
Virgin America 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 to approximately $10 million per quarter through 2014. Had the May 2013 restructuring been completed prior to the beginning of the year, Virgin America’s year-to-date net income would have been approximately $30 million higher.