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Tue, Feb 03, 2009

Virgin America Releases Financial Results After DOT Forces Issue

Airline Posted $175 Million Net Loss Through Q3 2008

They didn't want to do it, and argued with the Department of Transportation they shouldn't have to... but on Tuesday, upstart low-cost carrier Virgin America revealed the company's past financial data for the fourth quarter of 2007 and the first three quarters of 2008.

As expected by analysts, Virgin American posted an overall operating loss. However, the $175.4 million net loss for the first three quarters of 2008, on operating revenues of $259.6 million, could be viewed as a respectable showing for a new airline, competing in a tough market and slumping economy.

Also in the 'respectable' category is Virgin America's reported 77.6 percent load factor in the second quarter of 2008, and 81.4 percent load factor in the third quarter of 2008... signs the airline is growing in popularity, which should translate to higher revenues down the line.

"These results are consistent with our expectations -- with steady quarter over quarter growth in unit revenue since launch," said Virgin America President and CEO David Cush. "This is an industry with very high start-up costs and where large first year losses are common. We're confident in our business model and are in a strong position as a well-financed start-up with solid revenue growth and load factors, a modern, fuel efficient fleet, a maturing route network, and award-winning service the public has embraced.

"We're pleased with our progress to date, especially given fuel price volatility and economic uncertainty in 2008," Cush continued. "We believe our award-winning service, strong financing, streamlined cost structure and impressive revenue performance is the right recipe at a time when consumers are more discerning than ever as to where they'll spend their hard-earned dollars. We're in this for the long haul and are fully funded through our projected profitability date -- a strong indication of our investors' confidence in our business model."

The DOT recently denied Virgin America's request to keep its financial information private. Virgin argued it shouldn't be forced to reveal that data, as the airline is a privately-held company and that information is "competitively sensitive and ripe for misuse by the legacy carriers." Virgin also noted other small carriers have been able to guard their financial data, as have international carriers flying to the US.

Given the DOT's past history with Virgin America, however -- as ANN reported, the airline's start date was held up for nearly a year due to questions over foreign ownership concerns -- it's not particularly surprising DOT forced the issue.

FMI: www.virginamerica.com, www.dot.gov

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