Posted on: 28 April 2016 by Mark Howells
Virgin America has revealed its financial results for the first quarter 2016 (1Q16), featuring a net income excluding special items of $18.4 million, which was 74.5% up on the first quarter of 2015.
Operating income and operating margin in 1Q16 – excluding special items – were $33.2 million and 9.1%, improving 152.8% and 5.1 points, respectively."Virgin America performed exceptionally well as we entered 2016," commented David Cush, Virgin America's president and chief executive officer. "We reported record first quarter net income driven by continued unit revenue outperformance as compared with the domestic industry and the benefit of lower fuel costs. Importantly, we achieved these results with capacity growth of nearly 16% in the first quarter while also maintaining our focus on non-fuel unit costs. The proposed merger with Alaska Air Group recognises the successful business model we have built at Virgin America in just nine short years."The total operating revenue in 1Q16 was $364.0 million, an increase of 11.5% over 1Q15. Passenger revenue per available seat mile (PRASM) decreased 3.8%, compared with 1Q15, to 9.88 cents, driven by a 3.7% decrease in yield. Total RASM decreased 3.7% year-over-year.The total cost per available seat mile (CASM) excluding special items decreased 8.8% compared with 1Q15, to 10.13 cents. A decrease in fuel costs was the primary factor in the decline in CASM. Salaries, wages and benefits costs included a $3.4 million accrual for teammate profit sharing and related payroll taxes. CASM excluding special items, fuel costs and profit sharing for the quarter increased 1.8% year-over-year, to 7.96 cents. Total CASM on a GAAP basis decreased 7.8% compared with 1Q15, to 10.17 cents.Virgin America realised an average economic fuel cost per gallon including taxes and the impact of hedges of $1.57, which was 35.9% lower year-over-year. The special items in 1Q16 consisted of $1.6 million of costs related to the merger agreement with Alaska Air Group, signed on 1 April 2016 and an aggregate of $0.4 million of out-of-period fuel related adjustments.1Q16 operating income excluding special items was $33.2 million, an increase of 152.8% compared with 1Q15. The company's operating margin excluding special items of 9.1% improved by 5.1 percentage points year-over-year.Pre-tax income excluding special items was $29.4 million during 1Q16, an increase of 170.8% versus the 1Q15 figure. Net income excluding special items for the first quarter increased by 74.5% year-over-year to $18.4 million.The company recorded a provision for income taxes excluding special items of $10.3 million in 1Q16. Virgin America did not record a material provision for income taxes in 1Q15 due to the valuation allowance recorded against the company's deferred income tax assets. During the fourth quarter of 2015, the Company released substantially all of this valuation allowance.