Virgin America Reports First-Ever Quarterly Profit

Virgin America reported a third quarter net profit of $7.5 million—the airline’s first quarterly net profit. The growing airline reported a record quarterly operating profit of $21 million (a 314 percent improvement year-over-year), resulting in a 10.4 percent operating margin for the quarter. The airline reported revenues of $202 million for the quarter, a year-over-year revenue increase of 28 percent.

Virgin America also reported strong unit revenue performance (RASM) for the quarter, with a 17 percent improvement year-over-year, a period in which the industry’s unit revenue grew by 10 percent. The airline’s stage-length adjusted guest unit revenue was up 23 percent.

The airline’s yield per passenger mile in the third quarter was 11 cents, up 20 percent compared to the third quarter of 2009. Virgin America continued to hedge to help manage fuel price volatility. The airline has hedged 86 percent of its remaining 2010 projected fuel requirements at an average crude oil call strike price of $82 per barrel.

Adjusting for the non-cash unrealized gains on its fuel derivatives, the airline would have reported operating income of $19 million and a 9.4 percent operating margin for the third quarter.  Revenue passenger miles for the third quarter increased 7 percent, resulting in a third-quarter load factor of 84 percent, a drop of 2 points year-over-year.