As management had been stating last few months, Q2 performance did shape up to be very strong for VX.
Net income $37.0 million, up from $8.8 million in 2013.
Operating margin of 11.8 percent
7.8% jump in RASM
LF up 1.2 to 84.9%
Unrestricted cash $180.0mil
Full numbers:
http://finance.yahoo.com/news/virgin...orts-second-quarter-140000404.html
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Looks like in preparation for their IPO, they are starting to report numbers rather fast.
Now looking forward to a strong Q3 as well.
Kudos to the VX team.
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Virgin America Reports Strong Q2 Profit
From the desert to the sea, to all of Southern California
RE: Virgin America Reports Strong Q2 Profit
Nice operating margin, i'm happy to see them finally turning the corner.
The big question from me is, how will the B6 mint product affect them once it becomes established ?
The big question from me is, how will the B6 mint product affect them once it becomes established ?
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- razorbackfan
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RE: Virgin America Reports Strong Q2 Profit
I don't expect to see these results hold in Q3 and Q4. As they begin operations out of DAL, LGA and DCA they will see lower LF, lower cost per ticket, more ad spend etc. I could be wrong on this, but I don't see how they'll be able to hold profitability entering the markets.
RE: Virgin America Reports Strong Q2 Profit
Q3 should be quite strong, while Q4 the last 2-years has been positive as well if that is a trend to watch.
Company has said they expect another annual profit in 2014, so I'd say whatever expenses involved with Dallas startup in back end of the year they likely will offset it with profitability in other segments.
For Dallas its interesting to note, a recent analyst paper pointed out that todays market yields are higher than VX averages, so in reality Dallas flying could likely raise overall RASM/Yield as the company becomes less dependent on thin margin transcon activity.
Company has said they expect another annual profit in 2014, so I'd say whatever expenses involved with Dallas startup in back end of the year they likely will offset it with profitability in other segments.
For Dallas its interesting to note, a recent analyst paper pointed out that todays market yields are higher than VX averages, so in reality Dallas flying could likely raise overall RASM/Yield as the company becomes less dependent on thin margin transcon activity.
From the desert to the sea, to all of Southern California
RE: Virgin America Reports Strong Q2 Profit
| Quoting jetwet1 (Reply 1): Nice operating margin, i'm happy to see them finally turning the corner. |
This profit is looking good, and at least I'm looking forward to the IPO. For me the big question is not the B6 Mint product. Mine is the DAL gamble, it will be either fantastic (my hopes) or a real flop and possibly a death knell for VX.
RE: Virgin America Reports Strong Q2 Profit
If this was bad news about Virgin America thread would have 50 responses by now. I guess good news about VX is not of interest to participants here.
Anyhow, I congratulate VX and its staff. They have a marvelous airline and wish them great success in coming years.
Anyhow, I congratulate VX and its staff. They have a marvelous airline and wish them great success in coming years.
mercure f-wtcc
RE: Virgin America Reports Strong Q2 Profit
| Quoting LAXintl (Reply 3): For Dallas its interesting to note, a recent analyst paper pointed out that todays market yields are higher than VX averages, so in reality Dallas flying could likely raise overall RASM/Yield as the company becomes less dependent on thin margin transcon activity. |
DAL is generally the higher-fare of the two Metroplex airports where nonstop service is concerned, so this is a good point in one sense. In another sense, though, this really should surprise no one since stage length is lower than the VX average by virtue of Dallas' location. Thus, it's not clear to me how meaningful this distinction is since CASM is also going to be higher at the shorter stage length.
I can't decide whether I miss the tulip or the bowling shoe more
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- SocalApproach
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- MaverickM11
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RE: Virgin America Reports Strong Q2 Profit
| Quoting LAXintl (Reply 3): For Dallas its interesting to note, a recent analyst paper pointed out that todays market yields are higher than VX averages, so in reality Dallas flying could likely raise overall RASM/Yield as the company becomes less dependent on thin margin transcon activity. |
Of course DAL yields are higher; the average stage is shorter and that drives yields (and CASM) up. Vx could make all its flights intra California and yields would go through the roof.
| Quoting mercure1 (Reply 5): If this was bad news about Virgin America thread would have 50 responses by now. I guess good news about VX is not of interest to participants here. |
I wouldn't get too excited. They're still shrinking to profitability, cutting their previous next best adds to fund a risky DAL experiment, and facing unionization. The longterm prospects remain rough, and I think the current owners just want to unload this ASAP with the IPO.
I don't take responsibility at all
RE: Virgin America Reports Strong Q2 Profit
| Quoting mercure1 (Reply 5): If this was bad news about Virgin America thread would have 50 responses by now. I guess good news about VX is not of interest to participants here. Anyhow, I congratulate VX and its staff. They have a marvelous airline and wish them great success in coming years. |
For whatever reason, this great little airline rubs some people the wrong way.
| Quoting MaverickM11 (Reply 8): They're still shrinking to profitability, |
How do you define shrinking? Fleet is the same yoy, ASMs are essentially flat.
All the revenue numbers are headed in the right direction so they must be doing something right.
| Quoting MaverickM11 (Reply 8): cutting their previous next best adds to fund a risky DAL experiment |
Pruning under performing routes is smart, similar to what NK does to maximize return on assets.
One of the worlds most successful retail chains does the same thing. Bottom 10% selling merchandise is pruned annually and replaced with something else. Constant churn in search of best revenue mix.
| Quoting MaverickM11 (Reply 8): and facing unionization. |
Unions wont be the end, look at NK. Union and growing profits as well.
| Quoting MaverickM11 (Reply 8): I wouldn't get too excited. |
Will you ever get excited?
This makes it their 7th quarterly profit, on track for another annual profit. At some point I think their needs to be acceptance that they have some staying power and seat in the market place.
From the desert to the sea, to all of Southern California
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- Chaostheory
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RE: Virgin America Reports Strong Q2 Profit
| Quote: Quoting MaverickM11 (Reply 8): I wouldn't get too excited. |
| Quoting LAXintl (Reply 9): Will you ever get excited? |
Unless it's DL, he needs a helping hand.
Bumped into some of their flight crew in LAX some weeks ago and the apparently the airline is looking to acquire the A321 in the next few years.
RE: Virgin America Reports Strong Q2 Profit
| Quoting LAXintl (Reply 9): Unions wont be the end, look at NK. Union and growing profits as well. |
Unions work well when a carrier is growing. But as you already pointed out, VX isn't.
| Quoting LAXintl (Reply 9): Fleet is the same yoy, ASMs are essentially flat. |
I can't decide whether I miss the tulip or the bowling shoe more
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- MaverickM11
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RE: Virgin America Reports Strong Q2 Profit
| Quoting LAXintl (Reply 9): How do you define shrinking? |
Down 1.6% in ASMs is shrinking
| Quoting LAXintl (Reply 9): Pruning under performing routes is smart, similar to what NK does to maximize return on assets. |
You must be joking comparing VX' "pruning' with NK. I think that's why people get frustrated with VX--its admirers check their brain at the door because they see things all the VX bells and whistles that have managed to do nothing but generate PR (admirably) while they cancel another market from their home base. UA has trouble in South Florida and it's a fundamental flaw in their business; VX drops every other add and it's "just prunin!" NK has been running a double digit margin for years, going from strength to strength in bad and good economies, based on highly elastic passengers with close to zero loyalty. VX is pruning to get to profitability, while trying to gain loyalty with less elastic pax, whilst multiple mergers have helped them finally get fares that pay the rent after they went through a restructuring.
| Quoting LAXintl (Reply 9): This makes it their 7th quarterly profit, on track for another annual profit. At some point I think their needs to be acceptance that they have some staying power and seat in the market place. |
You'll be able to put your money where your mouth is very soon!
| Quoting ChaosTheory (Reply 10): Unless it's DL, he needs a helping hand. |
Oh am I a DL fan now?
I don't take responsibility at all
RE: Virgin America Reports Strong Q2 Profit
| Quoting MaverickM11 (Reply 12): Down 1.6% in ASMs is shrinking |
1.6% is statistical noise. For small company in a 90-day quarter that means about 1-days worth of flying.
Will you say they are growing when ASM rise 1% in Q3?
But if you are so worried about ASM count, please note company ASMs for first 6-months of 2014 - INCREASED 0.5%
So they are not "shrinking"
| Quoting MaverickM11 (Reply 12): You must be joking comparing VX' "pruning' with NK. |
From what I read, VX fleet size will be flat till later 2015, so with limited fleet in order to purse new opportunities they must trim from existing.
Like that retail example LAXintl gives. Store only has so much shelf space, so it cuts bottom performing to make room for new.
Matter of fact, I think what companies like this are doing is admirable and should be followed more in airline industry.
Silly to maintain routes year after year regardless of performance. Better to keep cutting from the bottom, to make room for new opportunities. Good cycle, and something done in normal business practice.
mercure f-wtcc
RE: Virgin America Reports Strong Q2 Profit
| Quoting mwh787 (Reply 4): This profit is looking good, and at least I'm looking forward to the IPO. For me the big question is not the B6 Mint product. Mine is the DAL gamble, it will be either fantastic (my hopes) or a real flop and possibly a death knell for VX. |
While I love the VX product, I wouldn't touch that stock, then again, I refuse to touch any airline stock
| Quoting mercure1 (Reply 5): If this was bad news about Virgin America thread would have 50 responses by now. I guess good news about VX is not of interest to participants here. |
So true.
| Quoting Cubsrule (Reply 11): Unions work well when a carrier is growing. But as you already pointed out, VX isn't. |
Not true, unions (and management) need to work together to build a successful business. The days of the Charles Bryan/Frank Lorenzo situation are behind us.
RE: Virgin America Reports Strong Q2 Profit
| Quoting Cubsrule (Reply 11): Unions work well when a carrier is growing. But as you already pointed out, VX isn't. |
Fleet growth resumes late 2015 into 2016 as 10 new A320s start to arrive.
| Quoting MaverickM11 (Reply 12): Down 1.6% in ASMs is shrinking |
If you really want to play a numbers game, then YOY ASM's are actually up 0.5%.
But like I said, things are essentially flat as the fleet count it flat.
You could say they were shrinking if they parked 10 planes or something, but nothing of the sort has occurred.
| Quoting MaverickM11 (Reply 12): You'll be able to put your money where your mouth is very soon! |
I hope so.
I've made my family millions over the years primarily in the airline sector, so I will certainly consider VX in the future as well.
| Quoting MaverickM11 (Reply 12): You must be joking comparing VX' "pruning' with NK. |
Again with no spare capacity, new flying must be funded by pruning old stuff. Obviously the weakest is what gets the chop.
Pretty simple concept VX has followed that either things work, or they get the axe. Never been afraid to exit markets - YYZ, SNA, etc.
From the desert to the sea, to all of Southern California
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- MaverickM11
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RE: Virgin America Reports Strong Q2 Profit
| Quoting mercure1 (Reply 13): So they are not "shrinking" |
| Quoting LAXintl (Reply 15): But like I said, things are essentially flat as the fleet count it flat. |
They've been down year over year several quarters. At best they're flat. Long story short, the only reason VX is making money is because they a) stopped growing b) restructured their costs and c) benefit from the industry consolidation, ie AA taking a massive amount of seats out of JFKLAX/SFO for example. There's next to nothing that VX is actively *doing* that is translating to profits.
| Quoting mercure1 (Reply 13): From what I read, VX fleet size will be flat till later 2015, so with limited fleet in order to purse new opportunities they must trim from existing. |
There's a difference between "trimming" from the existing to add profitable flying, to trimming to add essentially a hail Mary in DAL. This is like US of yore pulling down PIT to fund a FLL hub, hoping it works. Except restricted to only 2 gates at a highly restricted airport.
| Quoting LAXintl (Reply 15): You could say they were shrinking if they parked 10 planes or something, but nothing of the sort has occurred. |
Then you'd come up with some other silly excuse like "VX smart like G4 for not flying airplanes when they're losing so much money". The airline has big problems maintaining new flying out of LAX/SFO, and is "pruning" capacity to launch a hail Mary pass.
| Quoting LAXintl (Reply 15): Never been afraid to exit markets - YYZ, SNA, etc. |
You say that like they had a choice.
I don't take responsibility at all
RE: Virgin America Reports Strong Q2 Profit
| Quoting LAXintl (Reply 15): I hope so. I've made my family millions over the years primarily in the airline sector, so I will certainly consider VX in the future as well. |
No need to debate the future of VX anymore, this guy is an expert.
(Also, this might be my favorite quote of the year so far.)
As far as the growing/ shrinking debate, I wouldn't consider VX to be shrinking, but their modest profits, lack of growth now, lack of growth for the near future, small fleet, pulling out of markets, dropping routes, trying to get DAL as a focus city against AA & WN, and operating in heavily congested and delayed cities makes me want to stay far away from that stock.
RE: Virgin America Reports Strong Q2 Profit
| Quoting MaverickM11 (Reply 16): the only reason VX is making money |
Is that not the point?
You seem to be putting them down for managing to make money.
| Quoting MaverickM11 (Reply 16): You say that like they had a choice. |
Sure they have a choice.
Many airlines opt to stick around at loss making routes with hopes they will eventually turn the corner. VX has shown its has a low tolerance for poor performance and rather go pursue a new opportunity than wait around.
| Quoting MaverickM11 (Reply 16): Then you'd come up with some other silly excuse |
Its obvious VX rubs you wrong, and you'll question things no matter what they do.
From the desert to the sea, to all of Southern California
RE: Virgin America Reports Strong Q2 Profit
| Quoting MaverickM11 (Reply 16): |
So you complain when they are not making money (which we can understand), but now you also complain that they have managed to generate profit also during 7 quarters and also likely for a 2nd year in a row?
Their business concept, its delivery, and management cant be too bad.
So it seems VX has done far much better than they typical start up - where the failure rate in first 2 years is almost 90% per Economist magazine article earlier this year. They just celebrate their 7th anniversary earlier in August.
mercure f-wtcc
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RE: Virgin America Reports Strong Q2 Profit
| Quoting LAXintl (Reply 18): You seem to be putting them down for managing to make money. |
They've dodged a lot of bullets. I'll give them that. When they're making money *and* growing it'll be a different story.
| Quoting LAXintl (Reply 18): Its obvious VX rubs you wrong, and you'll question things no matter what they do. |
It's obvious everything VX does is wonderful to you. I can't argue with someone that thinks an airline's inability to execute their own business plan in their own hub is "smart capacity management".
| Quoting LAXintl (Reply 18): VX has shown its has a low tolerance for poor performance and rather go pursue a new opportunity than wait around. |
Of cooooooooourse. When they were losing money by the barrel they were smart to build up a loyal following and a network, and when they pulled out of those markets they were smart to cut their losses. Same argument when DL was launching a bunch of terrible flying and then sure enough pulling it all out. Always smart no matter what.
| Quoting mercure1 (Reply 20): So it seems VX has done far much better than they typical start up - where the failure rate in first 2 years is almost 90% per Economist magazine article earlier this year. They just celebrate their 7th anniversary earlier in August. |
90% of those carriers called it quits loooooooong before burning through $700MM+
I don't take responsibility at all
RE: Virgin America Reports Strong Q2 Profit
| Quoting MaverickM11 (Reply 21): It's obvious everything VX does is wonderful to you. I can't argue with someone that thinks an airline's inability to execute their own business plan in their own hub is "smart capacity management". |
No business is perfect and things can always go better, but what VX accomplishments has truly been revolutionary.
First they fought years to even get off the ground against all types of dirt people try to throw against them, some of the same crap industry is using to block Norwegian.
Once up and running they showed up with a spectacular product, with amazing delivery.
Even as a multi-decade AA EXP and UA 1K, I all trade those perks to utilize VX at any opportunity. And I know many that do the same.
Flying VX - the feeling is simply different. A simple smile, hello, thank you is just delivered differently and when combined with its fresh product simply elicits a different experience than any other US carrier. And its just not me, for having mere 50 aircraft they have cleaned up when it comes to consumer awards and recognition. They punch far above their weight in delivery and satisfaction.
At the end of the day, I've had dealings with Virgin companies since 1989/1990 or so, so I know much about behind the scenes dealings and certainly not everything is rosy, but in case of VX they ultimately managed to delivery a truly refreshing experience in the US airline industry.
As both a consumer and industry veteran I certainly hope they can keep the magic formula working for decades to come.
Btw - for the record my "favorite" US airline is Spirit. I'm a huge fan of ULCC model and its prospects, and something I'm busy working on with clients overseas with.
| Quoting MaverickM11 (Reply 21): 90% of those carriers called it quits loooooooong before burning through $700MM+ |
Nothing wrong with being well financed.
For example I have a overseas client that found a rich person willing to sink EUR190 mil into their enterprise because the old guy always loved planes.
From the desert to the sea, to all of Southern California
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- MaverickM11
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RE: Virgin America Reports Strong Q2 Profit
| Quoting LAXintl (Reply 22): No business is perfect and things can always go better, but what VX accomplishments has truly been revolutionary. |
I just couldn't disagree more. The only thing "revolutionary" that they've done is proven beyond any shred of doubt that people aren't willing to put their money where their mouth is, beyond possibly JFKSFO/LAX, when it comes to all the features VX offers. VS has been busy proving the same in the EU.
I don't take responsibility at all
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