Virgin America Reports Third Quarter 2012 Financial Results

         Virgin America Reports Third Quarter 2012 Financial Results

Airline Reports $15.8 Million Operating Profit in the Third Quarter and
Forecasts Operating Profit in the Fourth Quarter

Airline Announces Deferred Growth Plans

PR Newswire

SAN FRANCISCO, Nov. 16, 2012

SAN FRANCISCO, Nov. 16, 2012 /PRNewswire/ --Virgin America today reports its
financial results for the third quarter of 2012. The airline achieved a $15.8
million operating profit for the quarter, resulting in a four percent
operating margin. Despite the continued dual financial pressure of high fuel
prices and Virgin America's industry-leading capacity growth, the airline
reported an operating profit for the quarter, improved unit costs, and an
increase in average fares. For the third quarter, the carrier reported a 24
percent improvement year-over-year in earnings before interest, taxes,
depreciation and amortization, and aircraft rental expense (EBITDAR).
Year-to-date, the airline reported a record high EBITDAR of $135.7 million, an
improvement of 23 percent year-over-year. Cost per available seat mile
excluding fuel (ex-fuel CASM) decreased year-over-year by three percent in the
three months ended September 30, 2012. A privately-held company, the carrier
is additionally forecasting an operating profit for the fourth quarter of


From the third quarter of 2010 through the third quarter of 2012, the airline
increased available seat miles (ASMs) by 73 percent, significantly outpacing
the industry ASM growth average of 0.4 percent. Virgin America's rate of
growth was necessary to establish the airline's core network and to achieve
economies of scale. However, as the airline absorbed the tail-end of this
growth cycle, its entry into new markets created margin pressure which offset
gains in more mature markets. The airline's core markets (those operated more
than 24 months) achieved an operating margin of eight percent in the third
quarter and were profitable year-to-date. This strong performance in mature
markets was offset by weaker performance in newer destinations added during
the airline's rapid two-year growth phase. This phase of accelerated growth
is now largely complete, as the airline plans to take delivery of just one
additional aircraft in 2013—and today announces a deferred growth plan with
respect to aircraft on order. This reduction in growth will allow the carrier
to continue to improve profitability, as new markets develop to match the
performance of its core established network.

"Our major challenge has been managing significant growth into new markets
during both a recession and an environment of historic oil price highs," said
David Cush, President and CEO of Virgin America. "All airlines have faced
these same industry challenges, but none have done so as a brand new carrier
fueling 73 percent capacity growth in the past 24 months. We've consistently
seen that markets we operate in longer than 12 to 18 months mature into
profitability, demonstrating that once people fly with us, they stay with us –
especially higher-yielding business travelers."

Virgin America announces today that it has reached an agreement to modify its
Airbus aircraft order. Under the revised agreement, Virgin America's order
for current engine option A320 aircraft will be reduced from 30 positions to
ten, with delivery of those aircraft occurring in 2015 and 2016. In addition,
the airline announces it will defer its 30 Airbus A320neo positions to new
delivery dates in 2020 through 2022. Average ASM growth will decelerate from
the 28 percent annual growth rate the airline has driven over the past three
years, to mid single-digit annual ASM growth over the next several years. The
Company has taken delivery of 24 aircraft since the first quarter of 2010 –
growing to a fleet of 52 Airbus A320 Family aircraft.

"The low operating costs, cabin comfort and fuel efficient design of our
Airbus A320 Family fleet has provided an excellent platform for our growth to
date and we remain confident that it is the right aircraft for our future
plans. With restructured growth, an unrivaled product and growing loyalty
among business travelers, we're in a position to deliver strong performance in
2013 and beyond,"added Cush. "With slowed growth, we will be able to focus on
maximizing the value of our network, instead of managing additional capacity.
As we enter this period of measured growth, we expect the investment in our
network to continue to provide improved financial results."

In the 12 months ending in September 2012, Virgin America launched new service
to Puerto Vallarta, Palm Springs, Philadelphia, Portland and Washington DC's
Reagan National Airport. Since its 2007 launch, the airline has created 2,600
new jobs, expanded to 19 airport destinations, signed up 2.6 million Elevate®
members and swept the reader-based travel awards, including "Best Domestic
Airline" in Condé Nast Traveler's Readers' Choice Awards and Travel +
Leisure's World's Best Awards. As one of the few expanding U.S. airlines,
Virgin America grew by 495 teammates since the third quarter of 2011.

Top Line Third Quarter Reporting Highlights:

  oOperating results: The airline reported an operating profit of $15.8
    million in the third quarter.
  oAverage Fare: Average fare increased 3 percent year-over year.
  oLoad Factor: Revenue passenger miles increased 24 percent year-over-year
    on a 31 percent increase in capacity, resulting in a third quarter load
    factor of 80 percent– a five point load factor decrease for the quarter
  oTop line progress: Operating revenue for the third quarter grew by 27
    percent year-over-year to $368 million on a 31 percent increase in
    Available Seat Miles (ASMs), at a time when most of the industry reported
    flat capacity.
  oCost control: Operating expense per available seat mile excluding fuel
    (ex-fuel CASM) decreased by 3 percent in the quarter year-over-year,
    reflecting the economies of scale from the Company's growth over the past
  oCash: The airline ended the quarter with $75 million in unrestricted cash.

This year, Virgin America reached the threshold to be included in operational
reports published by the U.S. Department of Transportation (DOT) and as such
began reporting its on-time performance, baggage handling and other key
operational statistics to the DOT monthly. For the third quarter of 2012,
Virgin America achieved an 83.3 percent cumulative on-time performance,
placing the carrier fifth for on-time performance among all reporting major
U.S. carriers for the quarter. The airline's baggage handling rate for the
first nine months of 2012 was 0.76 mishandled baggage reports per 1000 guests,
which placed it first among all reporting U.S. carriers for baggage

Key milestones achieved in the third quarter of 2012 include:

  oIn July, Virgin America took thetop honors for the fifth consecutive year
    as "Best Domestic Airline" in the prestigiousTravel + LeisureWorld's
    Best Awards readers' survey.
  oIn July, the airlinedebutednew uniforms for the airline's 2,000
    in-flight, airport and pilot teammates.
  oIn July, the airline announceda suite of enhancements to its Elevate®
    frequent flyer program including new Elevate Gold and Elevate Silver
    status levels within the program, with perks that include: priority
    check-in, security clearance and boarding; points earning bonuses; free
    checked bag allowances; enhanced digital/social rewards; private
    discounts; an expanded advance purchase upgrade window for the airline's
    exclusive eight-seat First Class; complimentary space-available upgrades
    to the carrier's premium Main Cabin Select service; and complimentary
    access to the best seat assignments within Main Cabin.
  oIn August, the airline marked its fifth anniversary of operations with a
    week of festivities celebrating the airline's continued job growth,
    network expansion and award-winning service.
  oIn August, the airline inaugurated new daily nonstop service to Washington
    DC's Reagan National Airport from its SFO home.
  oIn September, the airline launched an integrated multi-media campaign that
    brought the airline's next generation cabins to life through the eyes of
    its frequent flyers.
  oIn September, the airline announced it would bring back its popular
    seasonal service from SFO to Palm Springs International Airport (PSP) and
    add a new weekly Saturday nonstop flight from New York's JFK International
    Airport to PSP – the only nonstop flight offered from the New York City
    area to Palm Springs.

Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C.
(IAD and DCA), Seattle, Las Vegas, San Diego, Boston, Fort Lauderdale,
Orlando, Dallas-Fort Worth, Los Cabos, Cancun, Chicago, Puerto Vallarta, Palm
Springs (seasonally), Philadelphia and Portland.

Although a privately held company, Virgin America is announcing these earnings
results in advance of the DOT quarterly reports.

Virgin America Inc.
Unaudited Statements of Operations
For the Three and Nine Months Ending September 30, 2012 and 2011
(in thousands)
                   Three months ended   Percent  Nine months ended    Percent
                   September 30         Change   September 30
                   2012       2011      %        2012       2011      %
 Guest           $         $        26.3     $         $        28.7
                   337,098   266,842           897,416   697,169
 Other           30,946     23,794    30.1     85,005     63,141    34.6
Total operating    368,044    290,636   26.6     982,421    760,310   29.2
 Aircraft fuel   142,870    110,143   (29.7)   406,696    306,787   (32.6)
 Aircraft rent   56,104     42,405    (32.3)   164,351    122,632   (34.0)
 Wages, salaries 43,823     35,323    (24.1)   129,576    101,562   (27.6)
and related costs
 Aircraft        15,742     14,713    (7.0)    53,137     40,936    (29.8)
 Landing fees    29,494     22,530    (30.9)   82,308     63,454    (29.7)
and other rent
 Sales and       28,309     20,647    (37.1)   81,050     61,561    (31.7)
 Guest services  13,365     11,050    (21.0)   37,668     31,019    (21.4)
and supplies
 Depreciation    2,953      1,953     (51.2)   8,225      6,743     (22.0)
 Other operating 19,554     15,646    (25.0)   56,247     44,881    (25.3)
Total operating    352,214    274,410   (28.4)   1,019,258  779,575   (30.7)
Operating          15,830     16,226    (2.4)    (36,837)   (19,265)  91.2
Operating margin   4.3%       5.6%      (1.3)    (3.7%)     (2.5%)    (1.2)
                                        pts                           pts
Interest expense,  28,458     19,528    45.7     83,557     50,311    66.1
Net loss           $        $      282.4    $         $       73.0
                   (12,628)   (3,302)            (120,394)  (69,576)
EBITDAR            $        $       23.6     $         $        23.3
                   74,887    60,584            135,739   110,110

ComparativeOperating Statistics
                  Three months ended    Percent       Nine months ended     Percent
                  September 30          Change        September 30          Change
                  2012       2011       %             2012       2011       %
Available seat
miles             3,375      2,576      31.0          9,424      7,198      30.9
Departures        15,152     11,693     29.6          42,321     32,651     29.6
Average stage     1,571      1,566      0.3           1,573      1,573      -
length (miles)
Aircraft in
service           52         39         33.3          50         37         35.1
Fleet             12.1       12.7       (4.7)         12.4       12.7       (2.4)
Guests            1,688,744  1,370,678  23.2          4,717,908  3,656,615  29.0
Average fare      $199.62    $194.68    2.5           $190.21    $190.66    (0.2)
Yield per
passenger mile    12.55¢     12.30¢     2.0           11.91¢     11.93¢     (0.2)
revenue           2,687      2,170      23.8          7,533      5,846      28.9
passenger miles
Load factor       79.6%      84.2%      (4.6)   pts 79.9%      81.2%      (1.3)   pts
Guest revenue
per available     9.99¢      10.36¢     (3.6)         9.52¢      9.69¢      (1.8)
seat mile
Total revenue
per available     10.91¢     11.28¢     (3.3)         10.42¢     10.56¢     (1.3)
seat mile
Cost per
available seat    10.44¢     10.65¢     (2.0)         10.82¢     10.83¢     (0.1)
mile - CASM
Cost per ASM,
excluding fuel    6.20¢      6.38¢      (2.8)         6.50¢      6.57¢      (1.1)
Fuel cost per     $3.28      $3.25      0.9           $3.34      $3.25      2.8
Fuel gallons
consumed          43,587     33,911     28.5          121,765    94,441     28.9
Teammates (FTEs)  2,406      2,022      19.0

About Virgin America: Headquartered in California, Virgin America offers
guests attractive fares and a host of innovative features aimed at reinventing
air travel. In just over five years flying, Virgin America was named "Best
Domestic Airline" in the Condé Nast Traveler 2008, 2009, 2010, 2011 and 2012
'Readers' Choice' Awards and "Best Domestic Airline" in Travel + Leisure's
2008, 2009, 2010, 2011 and 2012 'World's Best' Awards. The airline's base of
operations is San Francisco International Airport (SFO)'s sleek and
sustainable new Terminal 2. The airline's new aircraft offer interactive
in-flight entertainment systems and power outlets near every seat. Virgin
America offers Gogo™ WiFi on every flight and hosts the largest in-flight
entertainment library in the North American skies via the touch-screen Red™
platform. For more:

SOURCE Virgin America

Contact: Abby Lunardini +1-650-533-7576, ;
Jennifer Thomas +1-650-274-7329,
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