News Column

Planning IPO, Virgin America posts 2Q profit

August 12, 2014



SAN FRANCISCO (AP) Virgin America, which plans an initial public offering of stock, said Tuesday that it earned $37 million in the second quarter after losing money in the prior three months.

The results show how strong demand and limited new flights after a string of mergers are helping the airline industry. The average fare rose 4.9 percent to $206.81, an increase of nearly $10 each way.

It was a turnaround from the first quarter, when the Richard Branson-backed airline lost $22.4 million on a 7.2 percent drop in average fares. Most bigger U.S. airlines except United made money in the first quarter, and several posted record profits in the second quarter.

Virgin's second-quarter profit compared with income of $8.8 million a year earlier. Revenue rose 6.1 percent to $398.8 million.

Labor costs rose 21.2 percent, as Virgin added jobs. Still, the airline's young workforce accounted for only 16.9 percent of operating expenses, far lower than at most U.S. carriers.

The Burlingame, California-based airline filed last month for an IPO of up to $115 million. The company didn't indicate when the IPO would happen, where the shares would be traded, or give a ticker symbol.

Virgin began flying in 2007 and goes to more than 20 airports in the U.S. and Mexico, with key bases in San Francisco and Los Angeles. Its fleet of about 50 jets is dwarfed by industry leaders like American, United and Delta. It was unprofitable until 2013.


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Source: Associated Press


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