Virgin America Losses Mount, Cash Dwindles
Feb 3, 2009
Andrew Compart andrew_compart@aviationweek.com
Virgin America lost $273.7 million from July 2007 through September 2008, including a $59.1 million loss in the third quarter of 2008, and finished the third quarter with $25.4 million in cash, the airline's financial filings with the U.S. Transportation Department show.
The filings also show an operating loss of $262.2 million over the same 15-month period, with $311.7 million in operating revenue and $573.9 million in operating expenses.
A Virgin America spokeswoman declined to discuss any changes to the airline's cash position since Sept. 30. In an interview with AviationWeek in November, CEO David Cush said the airline had returned to the investment market to bolster its initial capitalization of $312 million.
As of November, the airline had raised more than $400 million in total, Cush said, but he did not disclose the time period in which the additional capital was raised. The filings with the DOT show the airline ended the fourth quarter of 2007 with $69.3 million in cash, the first quarter of 2008 with $30.3 million, the second with $11.1 million and the third with $25.4 million. It did not show any short-term investments.
Virgin America started service in August 2007. The DOT's Bureau of Transportation Statistics released the data from Virgin America's Form 41 filings today after Virgin America lost a nearly year-long battle to keep the information confidential.
The airline lost $34.8 million in the third quarter of 2007, $63.4 million in the fourth quarter of 2007, $52 million in the first quarter of 2008, $64.4 million in the second quarter of 2008 and $59.1 million in the third quarter of 2008.
That means that through the first nine months of 2008, Virgin America lost $175.4 million.
The airline's third quarter operating revenue climbed to its highest to date, at $114.2 million, but so did its operating expenses, at $168.5 million.
In a press release, Cush called the results "consistent with our expectations" and said the airline has seen "steady quarter-over-quarter growth in unit revenue since launch." The airline's leadership is "pleased with our progress to date, especially given fuel price volatility and economic uncertainty in 2008," he added.
"This is an industry with very high start-up costs and where large first-year losses are common," he said. "We're confident in our business model and are in a strong position as a well-financed start-up with solid revenue growth and load factors, a modern, fuel efficient fleet, a maturing route network, and award-winning service the public has embraced."
The data filed with the DOT also shows monthly load factors ranging from 78.4% to 82.1% from June through October of 2008. Virgin America noted that its third quarter 2008 load factor came to 81.4%, up from 77.6% in the second quarter.
AviationWeek.com photo by Guy Norris
