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ESTABLISHED IN 2004 AND STARTED OPERATIONS IN 2007. DOMESTIC, LOW-FARE, SCHEDULED & CHARTER, PASSENGER & CARGO, JET AIRPLANE SERVICES.
555 Airport Boulevard
Burlingame, California CA 94010, USA
520 Broadway, 4th Floor
New York, NY 10012, USA
USA (United States of America) was established in 1776, it covers an area of 9,363,123 sq km, its population is 280 million, its capital city is Washington DC, and its official language is English.
June 2004: Virgin US (VUS) will make San Francisco its principal base of operations, while establishing its corporate "airline HQ" across the continent in Manhattan, New York, where it expects to have >300 employees.
The "Virgin-branded USA airline start up" was offered >$11 million in New York State and city grants + incentives, "plus funds for job training assistance, cooperative marketing and community development."
San Francisco (SFO) will be home to the nascent carrier's flight crew (FC), maintenance technicians (MT), engineers, dispatching and other work functions. This "Operations HQ" will have >1,500 employees. California and the city of San Francisco offered >$15 million in various incentives, grants and training assistance.
Culturally, the cities reflect the Virgin brand's fun, dynamic style, making them both ideal places to recruit creative skilled employees, who can deliver their vision of outstanding customer service.
Don Applegarth, CIO, ex-Navitaire & Western Pacific Airlines. Bob Dana, CFO, ex-investment banker. Todd Pawlowski, VP Airports & Customer Service. Terry Rendleman, Senior VP Technical Operations, ex-Northwest Airlines (NWA) & United Airlines (UAL). Bob Weatherly, Senior VP Flight Operations, ex-Atlas Air (TLS) & Canadian International (CDI).
Has entered into an agreement to purchase and lease up to 105 Airbus (EDS) airplanes with service starting in mid 2005: including 11 orders A319 & 7 A320 with options for 72 A319/A320's. In addition, will lease 15 A320's from (GE) Capital Aviation Services (GEF).
July 2004: Greenbriar Equity Group, one of whose founders is former United Airlines (UAL) Chairman & CEO Gerald Greenwald, will head a consortium of investors that will hold a 51% stake in Virgin America (VUS). Under USA law, no more than 25% of voting rights and 49% of equity in an airline may be in foreign hands.
December 2005: Virgin America Incorporated (VUS), a USA-based start up, announced that it has secured $177.3 million in committed funding and has filed an application for certification with the USA Department of Transportation (DOT) to operate as an interstate carrier. VAI Partners LLC, an investment group funded by Black Canyon Capital and Cyrus Capital Partners, is providing the financing and will assume a 75% majority ownership and control of the airline. Virgin Group (VAA), headed by Richard Branson, will supply the remaining funds and secure a 25% minority stake in accordance with federal limits on foreign ownership in USA airlines. Virgin America (VUS) also reached a trademark licensing agreement to use the Virgin brand established by Branson.
The company's newly formed board of directors appointed Mark Lanigan, Managing Director of Black Canyon Capital, chairman of Virgin America while Fred Reid was named CEO. The carrier, which will be based in San Francisco, plans to launch scheduled service in 2006 with a fleet of 33 new A319s and A320s, 15 of which will be leased from GECAS (GEF) and 18 owned by (VUS). "We believe that a single home base in the Bay Area will help simplify operations during the company's intense start up," said Reid, a former President and COO of Delta Air Lines (DAL).
Virgin America (VUS) said it plans to provide "high quality jet service to major USA markets coast to coast" but did not indicate what cities will be served except for noting that New York is a likely destination. Its business plan is based on a Low-Cost Carrier (LCC) model that relies heavily on Internet technology for reservations, airport operations and in-flight functions, according to the company.
In its filing with (DOT), (VUS) stressed that it is controlled by USA citizens. "The terms of this investment and corporate structure, as well as the composition of the airline's board of directors and management team, will ensure actual and potential control of the airline always remains in the hands of USA citizens, a fact consistent with longstanding USA law and Department ownership principles," the application said. "(VUS)'s desire to operate within the USA is fully consistent with existing laws and regulations."
Opposition to the (DOT)'s proposal to ease how it interprets foreign control of a USA airline is rising in Congress. Last week, Representatives James Oberstar (Democrat - Minnesota) and Frank LoBiondo (Republican - New Jersey) introduced legislation in the House of Representatives aimed at preventing or at least delaying (DOT) from finalizing its Notice of Proposed Rulemaking (NPRM).
"For the past 65 years, the government . . . has required that USA citizens have actual control over all management decisions of USA airlines," said Oberstar in a statement. "the (DOT) now seeks to accomplish increased foreign control through the back door by proposing to change the actual control test so that it would cover only safety and security decisions, and allow other airline economic decisions, including day-to-day operations, market strategy, and purchase of airplanes, to be controlled by foreign officials. This is contrary to the requirements of law and would have a major impact on air service in the United States, and jobs for USA citizens."
The bill, which has more than >70 sponsors, would prohibit the (DOT) from issuing any final decision or final rule based on the (NPRM) that would change its interpretation of what constitutes "actual control" of a USA airline. It further would "make it clear that any final (DOT) rule is subject to the Congressional Review Act, which allows Congress to disapprove major regulatory rules issued by federal agencies," and require the (DOT) within 90 days of enactment of the (NPRM) to submit a report to Congress "that assesses the impact of the (NPRM) on all aspects of an airline's operation."
European regulators and negotiators have linked their support for the recent USA - European Union (EU) "open skies" agreement to the USA liberalizing its foreign ownership rules, but the proposal has drawn a lukewarm response among USA airlines.
January 2006: Dallas/Fort Worth International Airport (DFW) is supporting Virgin America (VUS)'s application before the USA Department of Transportation (DOT) for authority to begin operations. According to a statement, (DFW) is one of the airports being considered for service by the airline that plans to start operations later this year.
(VUS) is moving forward with hiring, regulatory filings and other preparations for its inaugural flight, CEO Fred Reid said.
On January 19, (VUS) will apply for a license from the Federal Aviation Administration (FAA). (VUS) recently announced it had signed a 10-year lease for its new corporate headquarters in Burlingame, California. It lined up $177.3 million in start-up money late last year and has applied to the USA (DOT) for permission to start carrying passengers. Executives say (VUS) will be a low-cost airline offering domestic flights.
A number of competitors, led by Continental Airlines (CAL), have challenged (VUS)'s (DOT) application. The airlines allege (VUS) will be controlled by non-USA citizens, a violation of federal law. Competitors point out that Virgin Group Ltd (VAA), the British-based venture capital firm run by billionaire Richard Branson, conceived of (VUS) and has invested in the company.
Reid said his company's application will show that it adheres to USA law.
Murray Air Certifications announced it completed (VUS)'s operating manuals process and assisted it in its effort to become a USA (FAA)-certified FAR 121 carrier.
February 2006: Former AMR Corporation (AAL) Chairman & CEO, Donald Carty was named Chairman of start-up Virgin America (VUS), which plans to launch USA service this year. Carty served as Chairman & CEO of AMR Corporation (AAL) from 1998 to April 2003, before being forced to resign following disclosure of the existence of special compensation packages for top AMR executives at a time when other employees were being asked to take pay and benefit reductions. "I've known Don for many years, and he knows the airline business," said (VUS) CEO, Fred Reid. "We feel fortunate to have someone with his expertise as our chairman."
A320-214 (2616, N621VA), (GEF) leased, delivery.
March 2006: A320-214 (2674, N622VA), GECAS (GEF) leased.
April 2006: Willow CSN was selected by proposed low-cost start-up Virgin America (VUS) to manage all of its customer service calls including reservations and flight information through a "virtual call center" staffed by home-based CyberAgents.
May 2006: Virgin America (VUS) is a USA-majority owned and controlled company that intends to start domestic scheduled, jet airplane operations in 2006 using A319 and A320 airplanes.
Parent organization/shareholders: VAI Prtners; & Virgin Group.
Main Base: San Francisco International Airport (SFO).
A319-112 (2773, N521VA) , (GEF) leased & A320-214 (2778, N624VA), (GEF) leased.
June 2006: The USA Congress will permit the Department of Transportation (DOT) to move forward with its Notice of Proposed Rulemaking (NPRM) that is intended to ease how the department interprets foreign control of USA airlines. Both the Senate and House agreed to drop language from a supplemental appropriations bill that would have delayed the rule through the September 30 end of the current fiscal year, to permit Congress to study the issue. In response to negative comments regarding the original proposal, the (DOT) in May issued a revised (NPRM) it said ensures that areas involving safety, security and national defense obligations will remain under the control of USA carrier decision-makers.
A319-112 (2811, N522VA), (GEF) leased & A320-214 (2800, N625VA), (GEF) leased.
July 2006: Virgin America (VUS) named Panasonic Avionics Corporation as its lead in-flight entertainment (IFE) hardware supplier.
A320-214 (2830, N626VA) (GEF) leased.
August 2006: Virgin America (VUS), the proposed Low Cost Carrier (LCC) startup that is 25% owned by Virgin Group, is being held up by objections over its USA citizenship from legacy carriers urging the USA Department of Transportation (DOT) to reject its application for an air operating certificate (AOC). (VUS) said that it has been forced to secure an additional +$53 million in temporary financing to fight what it calls "dilatory legal tactics" by Continental Airlines (CAL), Delta Air Lines (DAL), American Airlines (AAL), and US Airways (AMW)/(USA), who argue that the upstart is effectively controlled by the Virgin Group and therefore violates USA rules limiting foreign control of USA airlines.
(VUS) responded with a (DOT) filing that reiterated it is 75% owned by USA investors and managed by USA citizens such as CEO, Fred Reid, former President of Delta (DAL), who said he was confident the airline would meet with (DOT) approval. (CAL) pointed to the "shadow of foreign influence" in its (DOT) filing. (VUS) said the objections are "not based on reality or fact, but are simply an attempt to preserve the status quo, delay competition, and inject irrelevant issues into the proceeding." The legal fight could delay (VUS)'s launch for months as the (DOT) considers the objections. It filed its initial application in December, 2005 and already has leased 34 A320s. It emphasized that stalled efforts to change USA ownership and control rules should not affect its application, which it says complies fully with existing USA laws.
A320-214 (2851, N627VA), (GEF) leased, delivery.
October 2006: NavAero said its tBagC22 received a Supplemental Type Certificate (STC) as a Class 2 Electronic Flight Bag (EFB) on A320 family airplanes. The (EFB) will be deployed first by Virgin America (VUS). NavAero also received an (STC) for its Class 2 (EFB) for MD-10/-11 series airplanes. Although it did not disclose the name of the launch customer, it is believed to be FedEx (FED).
(VUS) unveiled its first airplane, an A320 named "Jefferson Airplane," in San Francisco in a ceremony attended by the California Governor, Arnold Schwarzenegger. The start-up, which has leased 34 A320s, still has not received a go-ahead from the USA authorities while potential USA competitors challenge its citizenship, claiming that real control rests with Richard Branson's Virgin (VAA) Group, not USA investors. The unveiling indicated the carrier is "ready, willing and able to fly," CEO, Fred Reid told reporters in attendance. The USA Department of Transportation (DOT) is expected to issue a ruling in January.
December 2006: A bipartisan group of USA House of Representatives members who sit on transportation and aviation committees, launched a pre-emptive strike last week, urging the White House not to push forward plans that would allow foreign investors to own majority shares in or control USA airlines.
A November 28 letter to White House Chief of Staff, Josh Bolten said, "Making the rule final in the face of bipartisan Congressional opposition would be a very poor start to the 110th Congress, in which we hope that Congress and the Administration will be able to work together for the good of the American people." It continued, "We can see no basis for an argument that the (DOT)'s proposed interpretation of 'actual control' is consistent with the plain meaning of these words. We are confident that if the proposed interpretation goes forward it will be challenged in court."
The letter was signed by Representatives Frank Lobiondo (Republican -New Jersey), Ted Poe (Republican - Texas), Jerry Costello (Democrat -Illinois) and James Oberstar (Democrat - Minnesota), who likely will become Chairman of the House Transportation Committee in January. They also stated that any major changes to current law "should be accomplished by Congressional action, not unilaterally imposed by the Executive Branch."
Jim Berard, Democratic spokesperson for the Transportation Committee, said "We are thinking the (DOT) may try to sneak this in and get it done, and by the time we find out about it, it would be too late." In the past, Congress has refused to pass legislation allowing foreign interests to control USA airlines, he noted. Currently, USA citizens must control 75% of the voting stock of a USA carrier. A proposed rule change would allow up to 49% to be controlled by foreign investors.
Berard explained that the objection to a proposed change is based on both policy and the process: "If the administration thinks it's a good idea, they should come to Congress and explain it. This is not the way to make this kind of change. Let's hold hearings, vote on it and see where it goes."
Later, Bowing to domestic political pressure exacerbated by the Democrats' rise to power in last month's midterm elections, the USA Dept of Transportation (DOT) abandoned its 13-month effort to ease restrictions on foreign control of domestic airlines, delivering a setback to a potential "open skies" agreement with the European Union (EU).
One week after a group of House aviation and transportation committee members sent a letter to the White House warning that imposing the rule "in the face of bipartisan Congressional opposition would be a very poor start to the 110th Congress," new Transportation Secretary, Mary Peters announced withdrawal of the proposal, which she said "would have allowed international investors more input in the marketing, routing and fleet structures of USA airlines, while retaining current domestic ownership and labor protections."
Peters added that the USA remains committed to completing an open aviation agreement with the (EU), but the European Commission (EC) issued a statement in which VP Transport, Jacques Barrot "expressed disappointment and regretted this decision." Barrot said the (DOT) proposal, which was released November 1, 2005, and amended last spring, "was an essential element in order to conclude the comprehensive first step Air Transport Agreement with the United States."
Peters offered to send negotiators to Brussels "on an urgent basis" early next year "to review the situation and discuss the way forward," the (EU) said. The two parties appeared to have reached an accord in May but Congress erected a financial stumbling block in response, passing legislation forbidding (DOT) from spending any money on implementing its proposal.
"It was clear from reviewing the comments [to the (NPRM)] that the (DOT) needs to do more to inform the public, labor groups and Congress about the benefits of allowing more international investment. We need a stronger national consensus about the best means of achieving that objective," Peters said. "Today's announcement in no way deters us from our goal of giving USA airlines complete access to the world's capital markets."
The Air Line Pilots Association welcomed the withdrawal of the (NPRM), stating that "any policy change that holds the potential to dramatically influence the USA airline industry must be part of a full Congressional public process, rather than a unilateral action by the Administration."
December 2006: Virgin America (VUS) said it was given USA (FAA) approval for "proving run" test flights, which it claimed moved it a step closer to (DOT) certification. But (VUS), which has leased 34 A320s, still faces citizenship challenges from USA competitors who say Richard Branson's Virgin Group (VAA), not USA investors, controls the carrier. It is unclear when it will be able to get its air operators certificate (AOC).
A319-132 (2773, N521VA) leased to new start-up, SkyBus (SKS) for launch of operations in April 2007.
January 2007: Virgin America (VUS) insisted it remains "committed to getting our wings" despite a sharp rebuke last week from the USA Department of Transportation (DOT), which tentatively denied (VUS)'s application for an air operating certificate (AOC) on grounds that it is not clearly 75% owned and controlled by USA citizens. "(VUS)'s close relationship with the UK-based Virgin Group (VAA) indicates that the carrier is not under the actual control of USA citizens," the (DOT) said in a long-awaited show cause order, pointing to "the Virgin Group (VAA)'s and its executives' pervasive involvement in the creation of (VUS), the funding Virgin Group (VAA) provided to the carrier, various interlocking financial agreements, and the Virgin Group (VAA)'s ability to influence decisions of the carrier's board."
(VUS), which plans to operate a fleet of 34 A320 family airplanes and currently has two A319s and seven A320s in storage, said it will use the (DOT) decision as a "road map to address the issues raised and to demonstrate to the (DOT) that (VUS) will meet all ownership and control requirements." It said it will respond formally to the decision by a January 10th deadline. "In order for an application to be granted, (VUS) would have to demonstrate that it is independent of the Virgin Group (VAA) and other non-USA citizens, and that at least 75% of its voting equity is held by USA citizens," the (DOT) said.
(VUS) unveiled "sweeping changes" designed to counter the USA (DOT)'s tentative rejection last month of its application for an air operating certificate (AOC). In an effort to "remove any doubt" that its application complies with USA law governing foreign ownership and control, (VUS) announced that UK-based Virgin Group (VAA) will reduce its presence on the new carrier's eight-member board from three to two voting seats, and will relinquish veto or consent rights normally afforded a minority investor. The group also will put its voting shares into a trust approved by the (DOT), which will allow the airline to fly without the "Virgin" name if it so chooses, and will remove the Virgin Group (VAA) head, Chairman, Sir Richard Branson from the (VUS) board at the (DOT)'s request. USA investment funds: Cyrus Capital and Black Canyon, will limit investors to USA citizens and will put an additional $20 million into the new company.
"Our investors have made key changes to the company that we feel demonstrably address the (DOT)'s concerns so that we can get our airline up and flying as soon as possible," (VUS) CEO, Fred Reid said. "We passed the (FAA)'s stringent safety review with flying colors and we now hope to move swiftly forward with our (DOT) certification."
(VUS) claimed it will create more than >1,000 new jobs in the USA in its first year of operation and up to +5,000 new positions within five years. It also launched a website in support of its application, "letvafly.com," that is offering a glimpse of the (VUS) product, including a virtual tour of its A320 cabin, that will feature a "lavish first class (F)," mood lighting and a self-service mini bar.
A320-214 (2993, N628VA), delivery.
February 2007: Virgin America (VUS) announced that former USA Secretary of Transportation & White House Chief of Staff, Samuel Skinner will become Vice Chairman, which CEO, Fred Reid said should "continue to demonstrate our compliance with the Department of Transportation (DOT)'s citizenship requirements."
(VUS) also said that pending (DOT) certification, it intends to serve New York (JFK), Washington Dulles, Los Angeles, San Diego and Las Vegas, within nine months of launch. (VUS) is based in San Francisco. It intends to fly to 10 destinations in its first year and up to 30 within five years.
2 A319-132s (2773; & 2811), leased to SkyBus Airlines (SKS). A320-214 (3037, N629VA), delivery.
March 2007: The USA Department of Transportation (DOT) tentatively approved Virgin America (VUS)'s plan to "reconfigure its ownership and management structure" and said the carrier could earn its air operating certificate (AOC) if it meets certain conditions, including replacing CEO, Fred Reid, who has overseen the certification process since he left Delta Air Lines (DAL) in April 2004.
The (DOT) said (VUS)'s revised plan, filed after rejection of the original application on grounds that the airline was not clearly owned and controlled by USA citizens and was influenced unduly by the minority investor Virgin Group (VAA), "puts it back on track to meet strict USA citizenship tests." The retooled application "should meet USA ownership rules, provided the company fully executes the proposed changes to its original plan." Among those changes is the ouster of Reid, formerly President & COO of Delta (DAL), who the (DOT) said has "longstanding association with foreign investors [that] raised concerns about who would control the new carrier."
(VUS) said it "welcomes" the tentative ruling and plans a midsummer launch, but did not promise it will meet all conditions. "We plan to meet with our shareholders immediately to address the Department's proposed conditions," Reid said.
Those conditions, the (DOT) said, include "removing the Virgin Group (VAA)'s veto power over certain contracts and expenditures, amending the company's loan agreements with the Virgin Group (VAA), restructuring its board of directors to reduce the number of foreign representatives, revising its trademark license to ensure that the USA carrier can operate independently of UK-based Virgin Atlantic (VAA), and establishing a voting trust to administer the Virgin Group (VAA)'s equity interest in the airline." The Virgin Group (VAA) owns a 25% stake in (VUS).
USA airlines are expected to file objections to this ruling. The (DOT)'s decision comes shortly after USA and (EU) negotiators reached a tentative agreement on an "open skies" deal that seeks to ease USA airline ownership, franchising and branding rules.
(VUS) will partner with EchoStar Communications to provide live inf-light satellite entertainment. Passengers will have access to DISH Network television as well as pay-per-view movies, music and games.
April 2007: Virgin America (VUS) asked the USA Dept of Transportation (DOT) to reconsider its ruling that CEO, Fred Reid must have his employment with the airline terminated within 90 days of receipt of its certification.
When tentatively approving Virgin America (VUS) last month, the (DOT) took the company up on its January offer to remove Reid from the board or the company "if absolutely necessary." In March, the (DOT) said Reid has "longstanding association with foreign investors [that] raised concerns about who would control the new carrier." It permitted him to act as a "follow-on" consultant for 180 days after removal.
Virgin America (VUS) argued in a heavily redacted filing that it has made structural changes sufficiently profound as to render Reid's association with the Virgin (VAA) Group irrelevant. "The far-reaching changes offered by [the airline] and its investors in this filing, as well as the agreement by these parties to comply with new (DOT) conditions, constitute a fundamental and significant change in the totality of circumstances," Virgin (VAA)'s attorneys wrote.
The carrier agreed to remove one of three Virgin (VAA) Group designees on the board, remove a "multitude" of Virgin (VAA) Group veto or consent rights, amend the franchise agreement to allow the new airline to exist separately from the Virgin (VAA) brand, place Virgin (VAA) Group's voting equity interests under a (DOT)-approved trustee and add a further $30 million at-risk investment by USA investors, among other concessions.
It asked the (DOT) to "eliminate the requirement to remove the CEO, or, alternatively, if that is not possible, extend the tenure of the CEO to ensure the airline's successful launch and ramp-up in the face of what is expected to be a heavy competitive response from legacy airlines."
Lufthansa Technik (DLH) (LTK) reached agreement with Virgin America (VUS) on a 10-year contract valued at more than >$250 million to provide total material operations and line maintenance support for the San Francisco (SFO)-based startup. Under the contract, (LTK) will establish central component and supplies depots at (SFO) and New York (JFK) and in the future will operate similar depots at other airports as (VUS)'s network grows. (VUS), which still is seeking its air operating certificate (AOC), plans to operate a fleet of 31 A320 family airplanes.
A320-214 (3101, N630VA), delivery.
May 2007: The USA Dept of Transportation (DOT) granted final approval for Virgin America (VUS) to begin operations, ending a prolonged process in which the airline was forced to revise its certification application to ease concerns it would be under the influence of minority owner Virgin (VAA) Group, a non-USA citizen, that has a 25% stake in the airline. While the (DOT) previously had required that CEO, Fred Reid step down as part of its tentative approval, it agreed to allow him to serve for six more months, giving him the opportunity to oversee the launch of a carrier whose certification he has spearheaded since leaving Delta Air Lines (DAL) in April 2004. "This has been quite a journey, but I'm truly happy that we will be able to launch our airline," Reid said. The San Francisco-based carrier plans a midsummer launch. "I applaud the (DOT) for approving our application and fulfilling their longstanding commitment to competition and new choices for air travelers." The (DOT) said in a statement that (VUS)'s "proposed changes to its management and financial structure will meet rigorous USA citizenship tests . . . This includes providing advance notice to the Department should the carrier receive additional financing from non-USA investors. The company also agreed to remove the Virgin (VAA) Group's veto power over certain contracts and expenditures, amend the company's loan agreements with the Virgin (VAA) Group, restructure its board of directors to reduce the number of foreign representatives, and revise its trademark license to ensure the USA carrier can operate independently of UK-based Virgin Atlantic (VAA)."
Transportation Secretary, Mary Peters added, "It's tough to think of a company that has done as much to meet our standards." (VUS) said it will serve 10 cities within the first year of operation, and 30 within five years.
A320-214 (3037, PR-MHL), delivery and leased to TAM Brazil (TPR). A320-214 (3135, N631VA), Babcock (BBB) leased.
June 2007: A320-214 (3152, N632VA), Pegasus (PSS) leased.
July 2007: Virgin America (VUS) received approval from the USA Dept of Transportation (DOT) to begin selling tickets in advance of its launch, which is planned for next month. The San Francisco-based startup said it is fully staffed, has taken delivery of 10 new A319s/A320s and is "ready to advertise, sell tickets and operate the airline." It did not disclose a specific launch date. After a lengthy and somewhat controversial application process, it received (DOT) approval in May.
A319-112 (3181, N523VA), delivery.
August 2007: After keeping a decidedly low profile during Virgin America (VUS)'s contentious USA Dept of Transportation (DOT) certification process, Virgin (VAA) Group Chairman, Richard Branson was front-and-center for the carrier's launch, calling the USA airline industry "abysmal," and promising better service aboard the startup's A319s/A320s, than passengers can get on competing domestic flights.
(VUS) went to great lengths to prove to the (DOT) that the Virgin (VAA) Group, which owns a 25% stake in the San Francisco (SFO)-based carrier, would not control it, in violation of strict USA foreign ownership regulations. But prior to launching service with flights from New York (JFK) and Los Angeles (LAX) to (SFO), the airline played up its association with Virgin (VAA)'s famous customer-friendly branding as a way to distinguish itself from USA competitors.
Branson made the rounds on USA network, morning television shows denouncing USA airlines' "dire" service, and was on hand at (JFK) for the inaugural flight, repeatedly saying "we," when referring to the new carrier. He told reporters before the first flight, which was delayed by weather, that USA airlines "go bust," because they fail to "offer any service to the customer."
On its website (http://www.virginamerica.com), (VUS) promoted its "really cool new planes" and advertised economy (Y) fares of $139 and first class (F) fares starting at $389 for (JFK) - (SFO) flights. "Join the party in first class (F), and get all the food, movies and massaging you want," the website trumpeted.
The airline previously said it has taken delivery of 10 new A319s/A320s to start service, which initially will connect (SFO) to (LAX) and (JFK), with Washington Dulles (IAD), and Las Vegas to be added to the network soon. Branson said that (VUS) aims to grow its fleet to 100 airplanes and "to fly most Americans to most major cities."
Later, Virgin America (VUS) launched twice-daily, Los Angeles - New York (JFK) service, its third route. It also flies from its San Francisco base to (JFK) and (LAX).
A319-112 (3204, N524VA), delivery.
September 2007: Virgin America (VUS) started twice-daily Washington Dulles - San Francisco (SFO) service aboard its new A319s/A320s. The startup, which launched last month, plans to begin thrice-daily (SFO) - Las Vegas service from Octpber 10. Routes currently served include (SFO) - New York (JFK), (SFO) - Los Angeles (LAX), and (JFK) - (LAX).
AirCell entered into an agreement with Virgin America (VUS) to provide broadband Internet service to passengers aboard the startup's A319s/A320s. Passengers will be able to access the Internet using either (VUS)'s "Red" In-Flight Entertainment (IFE) system or their own Wi-Fi-enabled laptops or other portable systems while in flight. AirCell and (VUS) will integrate AirCell's broadband service into (VUS)'s (IFE) system, AirCell said, noting that the service will be available aboard the entire fleet "sometime in 2008."
AirCell recently signed a Memo of Understanding (MOU) with American Airlines (AAL) to test its high-speed broadband capability next year on transcontinental flights aboard the carrier's 767-200s.
"AirCell's broadband service is the obvious choice to add to our guest experience," (VUS) Director IFE & Partnerships, Charles Ogilvie said. "Our goal with broadband is simple: Let guests decide how and when they want to communicate and interact, by providing relevant options." Added AirCell CEO, Jack Blumenstein: "Virgin (VUS) brings radical, positive change to every industry in which it operates. The AirCell relationship is no different." AirCell said its broadband system will include "robust Wi-Fi hotspots, that enable passengers to surf the Internet, use e-mail, and log on to their corporate (VPN)s using their personal Wi-Fi-equipped devices." The system also will "provide a path to a wealth of future cabin services" aboard Virgin America (VUS) flights.
(VUS) launched last month, touting customer service superior to existing USA carriers.
(VUS) is hiring 15 pilots (FC) per month.
Sabre Travel Network announced that Virgin America (VUS) signed a multiyear distribution agreement, that makes all of the airline's fares available to Sabre-connected travel agencies and corporations.
A320-214 (3230, N633VA), delivery.
October 2007: Virgin America (VUS) launched twice-daily, San Francisco - Washington Dulles (IAD) service, its fourth route. (IAD) - Los Angeles flights are scheduled to begin October 24.
Virgin America (VUS) is hiring 24 pilots (FC) this month.
November 2007: Virgin America (VUS), forced by the USA Dept of Transportation to replace CEO, Fred Reid, announced that American Airlines (AAL) Senior VP Global Sales, C David Cush will take over the position on December 10. "David's extensive industry experience, business acumen and creativity are the perfect attributes for leading the company as it continues to grow from a promising startup to a major carrier," (VUS) Chairman, Donald Carty said. "Both Fred Reid and I have worked with David during our careers, and we are confident he is the right person to lead Virgin America (VUS)." Cush also served as VP & General Sales Manager, VP of (AAL)'s St Louis hub, and was VP International Planning & Alliances during his 20 combined years at the carrier. He left (AAL) in 1996 to become COO at Aerolineas Argentinas (ARG), but returned two years later. (VUS) currently serves New York (JFK), Los Angeles, Las Vegas, and Washington Dulles, from its San Francisco base and will add San Diego on February 12.
A Coalition of Smaller Airlines, a group representing midsize USA carriers including Virgin America (VUS), AirTran Airways (CQT), Spirit Airlines (SPR), and Frontier Airlines (FRO), is lobbying the USA Dept of Transportation to ensure that any new traffic management rules at New York (JFK) do not unduly favor major international airlines. "We've got to find a solution . . . that doesn't shut out smaller airlines, which in many cases are offering premium service at lower fares," (VUS) Vice Chairman, Samuel Skinner said. Spirit (SPR)CEO, Ben Baldanza added: "We feel confident that the Department will not allow carriers, that dominate an airport, to decide who can operate at that airport." The airlines fear that (JFK) slots will be tightly controlled and that new entrants will be forced to buy slots from larger carriers.
December 2007: Virgin America (VUS) lost -$34.8 million during the third quarter, its first full quarter of operation, according to statistics released by the USA Dept of Transportation, and cited by Dow Jones. Operating revenues totaled $16.2 million against $51.6 million in expenses.
Virgin America (VUS) is accepting Flight Crew (FC) resumes. Applicants can apply online.
A319-112 (3324, N525VA), delivery.
January 2008: A319-112 (3347, N526VA), AND A320-214 (3359, N634VA), deliveries.
February 2008: A320-214 (3398, N635VA), (GEF) leased.
March 2008: Virgin USA (VUS) launched Seattle - San Francisco (SFO), encroaching on Alaska Airlines (ASA)'s territory with low fares, mood-lit cabins, sleek leather seats, video touch screens and - - later this year - - Internet service. As (ASA) phrased it in a recent internal memo to supervisors, "Today's competitive threat is the most significant we've faced in years." About 25% of the seats on Alaska (ASA) flights are between the Pacific Northwest and California. Virgin (VUS)'s celebration begins with its passengers in San Francisco, who will be offered Seattle coffee, grunge music, and its custom "Vir-million" champagne cocktails. The company spent $2 million retrofitting each A320 with electronics. "Seattle is an incredibly important market for San Francisco and Los Angeles," (VUS) President & CEO, David Cush said. "We also have a product that is very much focused on high-tech, on consumer electronics - - -. It is unlike anything that is flying in the domestic market.
Alaska Airlines (ASA) will counter with "Alaska Spirit Day" offering employee prizes, including gift cards to Starbucks, Costco, and Marriott Hotels. "Our battle to succeed has always been a fight against all carriers that fly our routes, notably Southwest (SWA). We'll face more new competition from JetBlue (JBL), starting May 21." Alaska (ASA)'s battle plan involves more than just engaging employees, said Steve Jarvis, Alaska's VP Marketing, Sales, & Customer Experience. (ASA) is countering with a new mileage plan - - "SEA Double" offers double miles on some routes - - additional flights, matched fares, better food and a new "West Most" advertising campaign. "It's very Seattle-to-California oriented, and we're going to have some fun with it," Jarvis said.
Among the new flights from the Pacific Northwest to California, (ASA) is adding three flights per day to Los Angeles (LAX), bringing the total to 15, to better compete with Virgin America (VUS)'s three daily flights to (LAX), beginning April 8. "You're not late for one - - you're early for the next," Jarvis said of the shuttle model. It's also trumpeting its all-Boeing (TBC) fleet with "buy local, fly local" billboards. The message there, especially to the Puget Sound area, is we are an all-Boeing (TBC) fleet. We are a great Boeing (TBC) customer. Boeing is a customer of ours as well," Jarvis said. "The message is really geared toward the Northwest."
Virgin (VUS) CEO, David Cush commented briefly on the competition with Alaska (ASA) in an interview. "I think what they're going to have the most trouble competing with will be when we have the electronic platform on the airplanes," he said, adding, "that said, Alaska (ASA) is a great airline. I'm sure they'll compete just fine."
2 A319-112s (3417, N527VA; 3445, N528VA), deliveries.
April 2008: Virgin America (VUS) announced the following frequency additions effective through January 6, 2009: A third daily Los Angeles (LAX) - Washington Dulles (IAD), beginning May 11; a third daily San Francisco (SFO) - (IAD) from May 18; a fifth daily (SFO) - New York ( JFK) beginning June 10; a fifth daily (LAX) - (JFK) from June 20; a fourth and fifth daily (SFO) - Seattle, beginning June 26.
Virgin America (VUS) will receive an additional +$100 million in capital in the next few weeks, according to a key investor who spoke to "The Wall Street Journal," bringing investment in the USA start-up to approximately $400 million. Cyrus Capital Partners, COO, Robert Nisi, a Virgin America (VUS) board member, said his hedge fund feels "very good about the investment" and that the new financing will not change the shareholding among the carrier's owners. (VUS) CEO, David Cush told "The Journal" that average loads are more than 70% LF and that it expects to post a profit in 2010.
(VUS) announced an increase in its fee for checking a second bag to $25 from $10 effective May 5, matching that imposed by several domestic competitors. Subsequent pieces will be subject to a $50 fee. First class (F) passengers will not be charged. Recently, it launched thrice-daily, Los Angeles - Seattle service, with a fourth daily flight scheduled to begin May 11.
2 A320-214s (3460, N636VA; 3465, N637VA), deliveries.
May 2008: Virgin America (VUS) said that it will seek government approval to serve Chicago O'Hare (ORD) and hopes to launch flights to (ORD) from San Francisco and Los Angeles later this year. Chicago would be the eighth city in its network. "With legacy airlines representing 99% of the domestic departures at O'Hare and low-cost airlines only representing 1%, Virgin America (VUS) intends to add some healthy competition to the market," the carrier said. "We want to be part of O'Hare's future."
Virgin America (VUS) is accepting Flight Crew (FC) resumes and is hiring 15 pilots (FC) per month. Applicants can apply online.
A320-214 (3503, N638VA), (GEF) leased.
June 2008: Virgin America (VUS) said that it will reduce fourth-quarter capacity by -10%, compared to previous projections by adding flights on "select high-demand routes, while reducing capacity on off-peak flights this fall," citing seasonal demand changes and high fuel prices. "These temporary schedule reductions and strategic additions better reflect the industry landscape we anticipate, given that consumer demand for air travel will be affected by seasonality and, potentially, by higher gas prices in the fall," President & CEO, David Cush said. The carrier said plans are still on for the fall launch of daily New York (JFK) - Las Vegas flights, as well as flights from San Francisco and Los Angeles to Chicago O'Hare.
Cush insisted that speculation that the start-up, which began operations in August 2007, could be in trouble, owing to the current economy is unfounded. "We are in this for the long haul and these targeted adjustments will allow us to grow and remain well-positioned and competitive," he said.
July 2008: Virgin America (VUS), as expected, appealed a decision by the USA Department of Transportation (DOT)'s Office of Airline Information denying its request for confidential treatment of its financial, traffic and origin, and destination, survey data filed with the (DOT)'s Bureau of Transportation Statistics. Republic Airlines and Shuttle America also appealed the decision denying confidential treatment.
August 2008: Menzies Aviation reached a deal with Virgin America (VUS) to provide ramp handling and cabin cleaning services at Seattle. It already handles (VUS) at Los Angeles and San Francisco.
September 2008: Virgin America (VUS) reached a multi-year, full-content distribution deal with Expedia, applicable to the agency’s popular online travel site, as well as its Egencia corporate booking tool. Hotwire, another consumer travel website owned by Expedia, will also sell the carrier’s tickets (Hotwire helps airlines
unload distressed inventory, enabling passengers to receive cheap
fares in exchange for purchasing flights without knowing all the details first, such as what carrier they’ll fly and the exact schedule). In addition, (VUS) will promote its flights in Expedia channels with an advertising campaign that includes targeted display ads.
Virgin America (VUS) is accepting Flight Crew (FC) resumes and is conducting classes of 8 in October and November. Applicants can apply online.
October 2008: Virgin America (VUS) will add a second daily, New York (JFK) - Las Vegas on December 11.
Virgin America (VUS) is introducing a Main Cabin Select fare for flights starting November 3. The service class will offer passengers 38-inch seat pitch, "a more streamlined boarding process" and complimentary food and cocktails inflight. "In short, this is for the traveler who wants an upscale experience for far less than what they would pay for business class (C) on someone else," President & CEO, David Cush said. (VUS) also began offering "fully refundable fares" up to the time of departure for one-way economy (Y) tickets, giving passengers "the option to change their itinerary or even receive a full refund should their plans change," Cush said.
November 2008: Virgin America (VUS) starts offering inflight Internet service, with Aircell's Gogo product, which provides full braodband service using an air-to-ground network. (VUS) aims to be the first USA carrier to have inflight Internet on all of its airplanes by the second quarter of next year.
Virgin America (VUS) launched Aircell's Gogo inflight Internet on November 22, via an air-to-ground video during a YouTube Live user event in San Francisco. A segment of the show was streamed to audiences on the ground, and online from an altitude of 10,688 m. (VUS) is on course to become the first USA airline to offer fleet wide inflight Internet. The target is set for the second quarter of 2009. Aircell announced that its Gogo inflight Internet service is available to passengers with Wi-Fi enabled devices on select Virgin America (VUS) flights. Service launched as a beta test on a single airplane November 22 and was offered free over the Thanksgiving holiday. With the official commercial launch, pricing will be set at $12.95 for flights over 3 hours and $9.95 for flights of 3 hours or less. Aircell said "multiple" (VUS) airplanes will offer the service by year end with all equipped by the 2009 second quarter.
2 A319-112s (3684, N529VA; 3686, N530VA), deliveries.
December 2008: Virgin America (VUS) will add Boston Logan (BOS) to its network and has canceled plans to serve Chicago O'Hare (ORD). It will launch A320 flights to (BOS), its eighth destination, from San Francisco (twice-daily) and Los Angeles (thrice-daily) on February 12. (ORD) service was tabled after (VUS) failed to secure gate leases. "Chicago remains at the top of our list and we look forward to launching our service when a gate solution has been found at O'Hare," it said in a statement. "However, given our immediate fleet plans, it will not be our next new city." (VUS) was seeking two gates and had been negotiating with United Airlines (UAL), American Airlines (AAL), and Delta Air Lines (DAL), the "Chicago Tribune" reported.
(VUS) will launch five-times-daily, San Francisco - Orange County (SNA) service on April 30. (SNA) will be the airline's ninth destination.
Virgin America (VUS) founding Senior VP & CFO, Robert Dana will leave the company in the 2009 first quarter.
February 2009: Having lost a bid to receive confidential treatment for financial and traffic information that it is required to file with the USA Department of Transportation (DOT) as a certificated carrier, Virgin America (VUS) said it suffered a -$175.4 million loss in the first three quarters of 2008. (VUS) had sought to have the so-called Form 41 information kept out of (DOT)'s publicly available databases. (VUS), launched in August 2007 and now operates 28 A320s to Los Angeles, New York (JFK), San Diego, Washington Dulles, Las Vegas and Seattle. Boston joins the network this month and flights to Orange County begin in April.
President & CEO, David Cush said, "These results are consistent with our expectations, with steady quarter-over-quarter growth in unit revenue since launch." He added that (VUS) is "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."
The first nine-months of 2008 had an operating revenue of +$259.6 million with a load factor of 77.6% LF. Third-quarter standalone load factor was 81.4% LF. The carrier said quarter-over-quarter unit revenue improved +28% in the 2008 first quarter, +26% in the second and +10 % in the third, while third-quarter unit revenue rose more than +75% from the fourth quarter of 2007 - - its first full operating quarter - - "despite a near-doubling of capacity." "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," Cush said.
Facing larger-than-expected losses and restive hedge fund investors, (VUS) could be the nation's "most endangered airline," according to "USA TODAY." Investment bankers are searching for new investors in (VUS), a sign, analysts say, that the airline's two original hedge funds are looking to cash out. (VUS) CEO, David Cush says the search for additional investors is merely "prudent" in the current economy.
Virgin America (VUS) named United Airlines (UAL) VP Engineering, Materials & Planning, Rick Wysong as Senior VP Technical Operations.
March 2009: Virgin America (VUS)'s poor financial showing has led to speculation that (VUS) may be in jeopardy of losing the support of its USA-based investors. Founded by impresario Richard Branson and designed to capitalize on the success of the Virgin brand, the airline is majority owned and operated by USA investment groups Black Canyon Capital of Los Angeles and Cyrus Capital Partners of New York. Branson maintains a 25% share.
Neither Black Canyon nor Cyrus Capital has made a public statement, according to "USA Today." But (VUS) President & CEO, David Cush confirmed that the carrier had hired investment banker Lazard Group to search for new USA investors. (VUS) reported a -$175.4 million net loss for the first nine months of 2008 on operating revenue of $259.6 million. Cush defended the result, saying it was "consistent with our expectation" and that (VUS) is "fully funded through our projected profitability date."
(VUS) is denying adamantly that it is in danger of losing the financial support of its USA-based investors and claims that it may be profitable by year end.
Last month, Alaska Airlines (ASA) petitioned the USA Department of Transportation (DOT) to conduct a "public inquiry into the citizenship status of (VUS)," citing media reports suggesting that (VUS) was on the verge of losing its status as a company that is 75% owned by USA citizens as required by law. "Only through a careful and ongoing review of (VUS)'s recent actions conducted on the public record can the (DOT) and public be assured that (VUS) will remain under the requirements for USA citizenship," AS General Counsel, Keith Loveless said at the time.
But a (VUS) spokesperson discounted the reports with a statement "Nothing has changed in our ownership and investment structure approved by the (DOT)." "Some of the press reports were spawned by the (ASA) petition, and much of it comes down to other carriers being threatened that we've injected some much-needed competition into a market that had been dominated by a few legacy carriers." The spokesperson confirmed that (VUS) is fully funded through next year and also defended its financial losses, which had reached -$175.4 million through the first nine months of 2008. "As a new carrier, it would be unusual if we were turning a profit this soon," she said. "We've never planned to turn a profit this early, and in fact we're beating our expectations and will likely see profitable quarters as early as late 2009."
The airline's average fourth-quarter 2008 load factor surpassed 80% LF. Regarding competition, it cited its entry into the Seattle market last March and said fares have dropped -14% on routes between the USA West Coast and Seattle while traffic has risen +34%.
(VUS) reported limited 2008 fourth-quarter financial figures and said it posted a -$27 million operating loss, narrowed from the -$59.9 million deficit in the year-ago period, its first full operating quarter. Revenue more than tripled to $109.7 million and expenses rose +42.5% to $136.7 million. Load factor soared +19.1 points to 81.2% LF, unit revenue was up +86.7% to 9.28 cents, and operating (CASM) fell -12.7% to 11.57 cents. (VUS) released limited nine-month figures last month. It now operates 28 A320s.
Regarding new speculation that USA-based investors, Cyrus Capital Partners and Black Canyon Capital have sold their stakes, a (VUS) spokesperson said that while it "cannot comment on private shareholder issues . . . any reports that we're in danger of not being compliant with the law are false and misleading." (VUS) said USA shareholders "remain in control" of the company, its board and more than >75% of its voting stock.
(VUS) will begin charging passengers $15 for their first piece of checked luggage on travel booked from May 5. The second through 10th checked bags also will cost $15 each, replacing (VUS)'s old policy of $25 for the second bag and $50 each for subsequent pieces. First class (F) passengers will be permitted to check two bags for free, and those purchasing (VUS)'s "Main Cabin Select" product will get one free bag. "Because we fly to primary airports, we mainly compete with the large network carriers, all of whom already charge this fee," VP Planning & Sales, Diana Walke explained. In addition, the charge for non-premium passengers canceling or changing a flight online dropped to $50 from $75.
(VUS) and Amadeus announced a three-year, full-content distribution agreement.
April 2009: Virgin America (VUS) launched five-times-daily, San Francisco - Orange County (SNA) service. (SNA) is its ninth destination.
USA House of Representatives Transportation Committee Chairman, James Oberstar (Democrat-Minnesota) urged the Department of Transportation to review whether (VUS) still meets the requirements of USA airline ownership and control laws, echoing earlier allegations by Alaska Airlines (ASA) that (VUS) now is wholly owned by the UK's Virgin Group. (VUS) was granted its USA air operating certificate (AOC) in May 2007, following a lengthy and contentious debate over whether it would operate independently or under the de facto control of Virgin (VAA) Chairman, Sir Richard Branson. While Virgin (VAA) controls a 25% share, the remaining shares were split evenly between Black Canyon Capital of Los Angeles and Cyrus Capital Partners of New York, an arrangement that eventually satisfied the (DOT).
But (VUS) President & CEO, David Cush confirmed earlier this year that the carrier had hired investment banker Lazard Group to search for new USA investors, and last month, "The Wall Street Journal" cited sources claiming that Black Canyon and Cyrus sold their shares to the Virgin Group. "If these reports are accurate, it calls into question whether (VUS) continues to meet the requirements for holding a certificate as a USA air carrier," Oberstar wrote in a letter to Transportation Secretary, Ray LaHood. "If the equity funds have no further stake in the success of the company, there is serious question as to whether their continued title to the shares is sufficient grounds for them to be considered the owner of the stock, for the purpose of the statutory requirement that a US carrier must have 75% of its voting stock owned or controlled by persons that are citizens of the United States."
A (VUS) spokesperson said last month that while it "cannot comment on private shareholder issues . . . any reports that we're in danger of not being compliant with the law are false and misleading." (VUS) did not respond to the release of Oberstar's letter.
After keeping a low profile during the original (AOC) battle, Branson was front-and-center for the carrier's August 2007 launch, appearing on USA television to slam the USA airline industry as "abysmal" and tout (VUS) as an alternative. Cush said last year that Branson has no role in the company's management but does offer occasional advice. "He's certainly not active day-to-day," Cush said.
Oberstar said the (DOT) may be required "to conduct a public proceeding to examine the question" of (VUS)'s citizenship.
May 2009: Virgin America (VUS) said it has completed installation of the Gogo in-flight Internet service on its fleet and is offering the service on each of its 100 daily flights. The cost is $12.95 for daytime flights longer than 3 hours, $9.95 for shorter daytime flights, $5.95 on red-eye flights, and $7.95 for hand held devices.
SEE ATTACHED "AIRWAYS" NEWS UPDATE - - "VUS-2009-05-A/B/C/D/E."
June 2009: Virgin America (VUS) reported a first-quarter net loss of -$40.3 million, narrowed from a net deficit of -$52 million in the year-ago period, and the nearly two-year-old carrier said it is poised to continue growing steadily. President & CEO, David Cush said, "Our first-quarter financial results exceeded our projections and we foresee continued strong revenue growth through the spring and summer." Revenue jumped +90.8% to $100.8 million, as capacity increased +68.7% to 1.4 billion (ASM)s. (VUS) did not provide specific traffic figures but said its (RPM)s doubled year-over-year and load factor was up +12.1 points to 73.1% LF.
Operating expenses rose +27.7% to $132.4 million and operating loss narrowed to -$31.6 million from -$50.8 million in the prior-year period. (RASM) lifted +13.2% to 7.21 cents, while (CASM) lowered -24.3% to 9.46 cents.
The USA Department of Transportation (DOT) released a letter it sent to House of Representatives Transportation Committee Chairman, James Oberstar (Democrat-Minnesota) stating that it is "reviewing . . . proposed transactions involving [VUS's] United States shareholders." Oberstar had urged the (DOT) to review whether (VUS) still meets the requirements of USA airline ownership and control laws, echoing earlier allegations by Alaska Airlines (ASA) that the carrier now is wholly owned by the UK's Virgin Group. (VUS), which insists it is in compliance, said that it has "solid financing" and is "focused on smart growth for the long haul." During the first quarter, it launched service to Boston from both Los Angeles and San Francisco. Last month, it completed installation of the Gogo inflight Internet service on its fleet and offers the service on each of its 100 daily flights.
(VUS) and V Australia (VAZ) reached an interline agreement effective June 8. It is (VUS)'s first interline relationship. The airlines both serve Los Angeles.
FltOps.com, an assistance service for professional pilots (FC), recently released a report of what each major USA carrier pays its captains and first officers. For the eleven largest USA airlines, including freight carriers FedEx (FED) and (UPS), the average annual pay for a first-year first officer flying the smallest mainline airplane is about $36,000. But the range between the best and worst paying airlines is large, with (FED) paying $51,000 and US Airways (AMW)/(USA) just $22,000. Southwest Airlines (SWA) is the second highest paying at the entry level ($50,000), while Continental Airlines (CAL) and United Airlines (UAL) are tied for second last at $27,000. At the other end of the scale are long tenured captains flying the largest airplanes, who earn an average of $165,000 per year. Again, the cargo carriers are tops with (UPS) and (FED) paying $231,000 and $211,000, respectively. The best paying passenger airline is (SWA) ($181,000), quite remarkable considering its pilots (FC) only fly narrow body 737s. The worst is JetBlue (JBL) ($123,000). Flt.Ops.com notes that pilots (FC) can earn considerably more than their base pay through international overrides, overtime work, per diems and other items.
Recently released federal government employment figures for airline pilots (FC) and mechanics (MT) run counter to data compiled by private organizations and the personal stories of highly-trained pilots (FC) standing in unemployment lines. FltOps.com recently held a pilot (FC) recruiting conference in Dallas-Fort Worth in which only a handful of airlines were on hand to interview pilots (FC). Last year’s event drew 35 airlines, spelling out how drastic the drop in pilot (FC) hiring has been, as air carriers quit hiring and in many case furlough pilots (FC). FltOps.com says the 15 largest USA airlines it tracks hired 2,300 pilots (FC) in 2006 and 2,440 in 2007. But last year, only 1,300 pilots (FC) found jobs. Through the first four months of 2009, only 28 new pilots (FC) joined the 15 air carriers. FltOps.com’s figures jive with that of AIR Inc, the aviation career information service, that for two decades served as a reservoir of data on pilot (FC) hirings. But if anyone needed more evidence of the worsening condition of the airline industry, Air Inc in February this year, shuttered its operation as a result of the sorry state of the economy worldwide, which has produced a dearth of new commercial pilot (FC) jobs as legacy airlines shed capacity, implementing pilot (FC) furloughs and layoffs while also putting off new flight deck crew (FC) hiring.
By the end of 2008, as the recession deepened, it became clear that the future would be bleak for newly minted flight school graduates. Air Inc said airline pilot (FC) hiring totals for 2008 were less than half of what they were the previous year, 6,479 compared to 13,157 in 2007.
However, the federal government says USA scheduled passenger airlines employed +2.3% more pilots (FC) and +5.9% more maintenance (MT) workers in 2008 than in 2007, while total industry jobs declined by -3.0%. According to the USA Department of Transportation (DOT)’s Bureau of Transportation Statistics (BTS), the seven large network carriers employed +1.1% more pilots (FC) and +8.6% more maintenance (MT) workers in 2008 than in 2007. The seven largest low-cost carriers (LCC)s employed +5.2% more pilots (FC) and -6.8% fewer maintenance (MT) workers from 2007 to 2008.
Delta Air Lines (DAL) had the largest increase in pilots (FC) of any network airline from 2007 to 2008,K while Alaska Airlines (ASA) had the greatest percentage decrease in pilot (FC) employment of the network airlines. United Airlines (UAL) had the largest increase in maintenance workers of any network airline from 2007 to 2008, while Northwest Airlines (NWA) had the smallest increase.
All of the low-cost carriers (LCC)s except Frontier Airlines (FRO) added pilots (FC) from 2007 to 2008. Spirit Airlines (SPR) had the largest increase in pilot (FC) employment followed by Allegiant Airlines (WJE). (WJE) had the largest increase in maintenance (MT) workers of any low-cost airline from 2007 to 2008, while (SPR) had the largest reduction. The seven network carriers employed 13.2 pilots per airplane in 2008, down from 13.5 pilots (FC) per airplane in 2007. The (LCC)s employed 11.2 pilots (FC) per airplane in 2008, down -1.8% from 11.4 pilots (FC) per airplane in 2007.
Alaska Airlines (ASA) had 12.0 pilots (FC) per airplane in 2008, down from 12.9 (FC) per airplane in 2007, the fewest of any network airline. Delta (DAL), with 14.9 per airplane, up from 14.3 per airplane in 2008, had the largest increase in the number of pilots (FC) per airplane from 2007 to 2008 and had the most pilots (FC) per airplane of any network carrier.
Allegiant (WJE) had 9.3 pilots (FC) per airplane in 2008, the fewest of any (LCC), compared to 9.6 pilots (FC) per airplane in 2007. Spirit (SPR), with 15.5 (FC) per airplane, up from 12.6 (FC) per airplane in 2007 had the most pilots (FC) per airplane in the (LCC)s group.
As regards airline mechanics (MT), the (BTS) said the passenger airlines had 8.9 maintenance (MT) workers per airplane in 2008, up from 8.3 per airplane in 2007. The network airlines had 12.9 maintenance (MT) workers per airplane in 2008, up from 12.3 (MT) per airplane in 2007. Spending by network airlines for outsourced maintenance increased from 42.5% of total maintenance spending in 2007 to 42.8% in 2008. The (LCC)s had 3.2 maintenance (MT) workers per airplane in 2008, down from 3.7 (MT) per airplane in 2007. Spending by (LCC)s for outsourced maintenance increased from 52.1% of total maintenance spending in 2007 to 54.6% in 2007.
(NWA) had 0.8 maintenance (MT) workers per airplane in 2008, the fewest of any network airline and unchanged from the 0.8 employees per airplane in 2007. (NWA)’s spending for outsourcing maintenance declined from 71.0% of total spending in 2007 to 65.9% in 2008. American Airlines (AAL) had 22.4 maintenance (MT) workers per airplane in 2008, the most of any network airline. (AAL)’s spending for outsourcing was 23.6% of total maintenance spending in 2008, the lowest percentage spending share of the network carriers.
Virgin America (VUS) had 1.7 maintenance (MT) workers per airplane in 2008 the fewest of any (LCC). Of the (LCC)s, Spirit (SPR) spent the smallest portion of its maintenance expense on outsourcing at 22.6%. Southwest (SWA) had the highest percentage share for outsourcing at 61.3%. Frontier (FRO) had 3.9 maintenance (MT) workers per airplane in 2008, the most of any (LCC) but down from 7.7 (MT) employees per airplane in 2007. (FRO)’s spending for outsourcing increased from 20.5% of total maintenance spending in 2007 to 24.9% in 2008.
In the news, Alaska Airlines (ASA) and its mechanics (MT) union produced a tentative agreement on a two-year contract extension, through October 17, 2011. The Aircraft Mechanics Fraternal Association (AMFA) represents 655 airline technicians (MT). (ASA) and the union announced that they expect the results of the ratification vote by late July. (AMFA) is the largest craft union representing airplane maintenance technicians (MT) and related employees and serves members at (ASA), Mesaba Airlines and (SWA).
But (SWA) pilots (FC) rejected a tentative five-year contract that would have increased their salaries and retirement benefits. Work to reopen contract talks with (SWA) will begin immediately, said Carl Kuwitzky, President of the (SWA) Pilots’ Association. Almost 51% of pilots (FC) voted against the agreement, which was reached in January after >2 years of talks. In the interim, the existing contract remains in effect. >95% of pilots (FC) voted. "We are naturally disappointed and acknowledge it was a very close vote," said Chuck Magill, VP Flight Operations for (SWA). "We reached a tentative agreement in good faith, and both sides put a lot of effort into getting to this point. We have an outstanding and highly productive group of Pilots (FC), and we appreciate their active involvement in the voting process. We welcome the opportunity for our negotiating teams to re-engage and work toward an agreement that best meets the needs of our company and our outstanding pilots during these challenging economic times."
Meanwhile, it is reported that the skies aren’t so friendly for Steffan Schmidt and Chris Campbell. They were recently found on a street in Seattle, at rush hour, holding signs more often used by panhandlers. “Two laid-off pilots (FC)” read Schmidt's sign. “Will Fly for Food” Campbell’s sign said. It’s a small industry, and there aren’t a lot of pilot (FC) gigs on Craigslist or Monster, said Campbell, who lost his job flying a corporate airplane. Schmidt was laid off from his job flying a corporate plane three months ago, and figured they would get some “exposure” by standing at a busy freeway ramp. “The normal way to find employment didn’t cut it,” he said. Schmidt said he wanted to get off unemployment, and not “waste any more tax dollars.” They're seeking pilot (FC) jobs, not handouts, but passersby offered them money and books, which they politely declined.
(VUS) CEO, David Cush told "Bloomberg News" that "certainly one or more" American investors "will come to fruition before year end . . . These expressions are a lot firmer than they have been in the past. There is more capital available than there was six months ago. The risk tolerance has improved." He said (VUS) has received five written proposals and reiterated that "we're still in compliance with USA law" and that Black Canyon Capital and Cyrus Capital Partners continue to control a combined 75% stake, the news service reported. He also said (VUS) is looking to secure gates at Chicago O'Hare (ORD) in the 2010 second quarter. He expects Delta Air Lines (DAL) to surrender some assets as part of its merger with Northwest Airlines (NWA).
August 2009: Virgin America (VUS) will launch service to Fort Lauderdale on November 18 with twice-daily flights from both San Francisco and Los Angeles. It will be (VUS)'s 10th destination.
(VUS) narrowed its second-quarter loss to -$15.8 million from the -$64.4 million deficit suffered in the year-ago quarter, claiming that its "business model is right on track" and its service and amenities "provide an unrivaled value proposition at a time when consumers are more discerning than ever." Revenue rose +46.9% to $135.9 million against a -4.7% decline in costs to $147.3 million. Operating loss improved +81.6% to -$11.4 million from -$62.1 million in the second quarter of 2008. It enjoyed a +7.7-point improvement in load factor to 85.3% LF on a +47.9% hike in capacity to 1.7 billion (ASM)s. Unit revenue was down -0.6% to 7.99 cents and operating (CASM) plunged -35.6% to 8.66 cents, or -20.9% to 6.47 cents excluding fuel. (VUS) launched service to Orange County during the quarter and finished equipping its fleet with Gogo inflight Internet in May. It said that "some flights and routes" see 20% - 25% of passengers using the service. It currently serves nine destinations and will add Fort Lauderdale in November.
President & CEO, David Cush told "Bloomberg News" that (VUS) would be interested in Frontier Airlines (FRO)'s A320 family airplanes if (FRO) is acquired by (SWA), which operates 737s. "Those are recent-vintage airplanes and under the right economics, we would be interested," Cush said.
(VUS) named US Airways (AMW)/(USA) VP Customer Service, Ross Bonanno as VP Airports & Guest Care.
(VUS) announced that its fee for all checked bags will be raised from $15 to $20 for tickets purchased Friday onwards for flights on or after September 10.
October 2009: Virgin America (VUS) now has fleet-wide Wi-Fi capability and will offer the service for free during the winter holiday season. The promotion is being offered in tandem with Google.
November 2009: Virgin America (VUS) launched twice-daily service to Fort Lauderdale (its 10th destination) from both San Francisco and Los Angeles.
December 2009: Virgin America (VUS) reported a -$5.9 million loss in the third quarter, narrowed significantly from the -$59.1 million deficit in the year-ago period, and reported its first three-month operating profit since launching service in August 2007. "At a time when fliers are more discerning than ever, it is clear that our low fares, award-winning guest service and innovative amenities continue to convert a growing network of loyal travelers," CEO, David Cush said. (VUS)'s improvement came during a rough quarter in the USA when the nine largest airlines reported an aggregate -$578 million loss and only AirTran Airways (CQT), Alaska Air (ASA) Group, and JetBlue Airways (JBL) were in the black.
(VUS)'s revenue rose +38.3% year-over-year to $157.9 million and expenses were cut -9.3% to $152.8 million, leading to the operating surplus of +$5.1 million, reversed from a -$54.3 million loss in the 2008 third quarter.
(VUS) said traffic surged +45% against a +37.4% lift in capacity to 1.78 billion (ASM)s, lifting load factor +5.2 points to 86.6% LF. Unit revenue was up +0.7% to 8.87 cents, while operating (CASM) was slashed -33.9% to 8.59 cents, or by -24.4% to 5.96 cents excluding fuel. Flights to Fort Lauderdale, its 10th destination, began in November.
February 2010: Virgin America (VUS) is raising its flat fee for checked bags from $20 to $25 for bookings made on or after February 12 for travel on or after March 1. The fee will be the same for "a first checked bag . . . through a tenth checked bag," (VUS) said. First-class (F) passengers' first and second checked bags will be exempt, as will the first bag checked by business-class (C) passengers and economy passengers (Y) with refundable tickets.
March 2010: Virgin America (VUS) announced it will add nine A320s (six arriving this year and three scheduled in the 2011 first quarter), bringing its fleet to 37 and enabling it to launch new daily flights to Orlando International from Los Angeles (LAX) and San Francisco (SFO) on August 19.
(VUS) will cease (SFO) - Orange County service on May 26 as part of a growing emphasis on longer flights and said it plans to open "at least" three additional destinations later this year. Contingent on regulatory approval, it plans to begin daily service from (LAX) and (SFO) to Toronto Pearson, its first international destination, as early as June.
"Despite our relatively strong performance at [Orange County], given our new fleet plan and network prospects, we've made the decision to focus on the immediate long-haul opportunities that the Orlando and Toronto markets provide," Virgin America (VUS) President & CEO, David Cush said. By this time next year, it plans to grow its fleet by approximately one-third. "With strong financial performance, a new ownership structure and growth in fleet size, we're pleased to be able to expand," Cush added. It currently operates 28 A320s. The nine new aircraft will leased, according to "The Wall Street Journal."
Last year, the USA Department of Transportation launched a review of (VUS)'s ownership after USA interests dipped below the required 75% voting stake. It was cleared as a "USA citizen . . . under the actual control of USA citizens" in January after implementing changes regarding investment and board composition and now is "poised for major growth in 2010," it said.
(VUS) reported record load factors, improved unit costs, and its first quarterly operating profit (+$157.9 million) in the 2009 third quarter, a +38.3% increase year-over-year.
April 2010: Virgin America (VUS), Virgin Blue (VOZ) and its V Australia (VAZ) subsidiary announced the linkage of their loyalty programs. (VUS) and (VOZ) also announced a cabin crew (CA) exchange program set to start in October.
Virgin America (VUS) will launch services to its first destination outside the USA with twice-daily flights to Toronto Pearson from San Francisco and Los Angeles on June 23.
Air Pacific (APC) named Virgin America (VUS) Senior VP, Dave Pflieger as its new Managing Director & CEO, effective May 1, succeeding the retiring John Campbell. Pflieger, 47, joined (VUS) in 2004 and led the effort to secure certification as a USA carrier. An A319/A320 captain, he piloted (VUS)'s inaugural flight from San Francisco to Washington Dulles. Prior to joining (VUS), he was VP Operations at Delta Air Lines (DAL) subsidiary, Song (SNG).
June 2010: Virgin America (VUS) reported a first-quarter net loss of -$35.5 million, narrowed from a year-ago deficit of -$40.3 million, but said it remains on track for a full-year operating profit.
"With a revenue increase of nearly +50% year-over-year and a unique service that is continuing to hit the mark with consumers, we're pleased with our results," President & CEO, David Cush said. (VUS) generated $146.8 million in revenue during the quarter, up +45.7% year-over-year.
"We're optimistic about the improving revenue environment and look forward to expanding to five new destinations in 2010 and creating over >500 additional new jobs a year as we grow," Cush added. The new destinations will include Orlando and Toronto, he said.
Operating expenses rose +28.3% to $168.42 million and operating loss narrowed to -$21.6 million from -$30.4 million in the prior-year period. (RASM) lifted +21.2% to 8.29 cents, while (CASM) grew +6.8% to 9.51 cents.
A320-214 (3656, N641VA), leased from Jazeera Airways (JZI), ex-(9K-CAG).
July 2010: Virgin America (VUS) launched daily service to Toronto Pearson from San Francisco (SFO) and Los Angeles (LAX), its first international destination, which it revealed plans for in March. (VUS) also announced its intent to launch flights from (SFO) to San Jose del Cabo (a route already flown by United Airlines (UAL) and Alaska Airlines (ASA)) and Cancun (CUN), and from (LAX) to (CUN) and has filed with the USA Department of Transportation for authority to begin the routes this winter. (VUS) will launch daily service to Orlando from Los Angeles and San Francisco on October 6. Flights were originally scheduled to begin Auguat 19 but were postponed due to delays in leased airplane deliveries.
Airbus (EDS) announced what it described as "a nonbinding" Memo of Understanding (MOU) with Virgin America (VUS) for 40 A320 family airplanes valued $3.3 billion at list prices, plus a further 30 options.
If (VUS)'s (MOU) is converted into a firm order, deliveries of the firm airplanes will run from 2013 to 2016 with options beginning in 2017. “It is our full expectation that it will lead to a firm contract in the months ahead,” President & CEO, David Cush stressed. (VUS) currently operates 10 A319s and 18 A320s and will put 22 purchased and leased A320s into service by 2012.
The new agreement covers A320s with the ability to upgrade to A321s “if we see the need,” Cush said, adding, “We would anticipate the new airplanes will have the sharklets.” (VUS) has not yet announced its choice of engines but its current airplanes are powered by (CFM56)s.
2 A320-214s (3349, N640VA; 3670, N642VA), ex-(9K-CAF & 9K-CAH), ex-Jazeera Airways (JZI).
August 2010: Virgin America (VUS) will begin service to Dallas/Fort Worth International Airport (DFW) in December, challenging American Airlines (AAL) at its hometown hub with service from Los Angeles and San Francisco. To a lesser extent, it also will face United Airlines (UAL) on the routes.
(VUS) says its twice-daily flights on A320 family airplanes will
begin December 1 from Los Angeles International Airport and December 6 from San Francisco International Airport. In making (DFW) the 12th destination in its network, (VUS) noted strong business ties between (DFW) and the California cities on financial services, energy and technology. The scheduling of the flights also allows for connections from Las Vegas, San Diego, and Seattle, (VUS) says.
(VUS) operates A320 airplanes configured for 149 seats and A319 airplanes with 119 seats. According to currently loaded schedules, when (VUS) starts its service in December, (AAL) will be offering as many as 16 daily flights on the Los Angeles route using 737, 757 and 767 airplanes and MD-80 family airplanes, with seating configurations ranging from 140 to 225 seats. United (UAL) will be offering twice-daily flights using SkyWest-operated United Connection service on 66-seat Bombardier CRJ-700s.
On the San Francisco route, (AAL) will be offering as many as nine daily flights using 757s with 188 seats and MD-80 family airplanes with 140 seats. (UAL) will be offering twice-daily flights, one on its own 138-seat A320 and the other on SkyWest-operated 66-seat CRJ-700s.
(DFW) officials say they expect passengers to see a “big benefit” from the injection of low-cost competition into two of the airport’s largest markets. (VUS) will become the 11th domestic carrier operating out of (DFW) and the fifth low-cost carrier (LCC), if Frontier Airlines (FRO) and Midwest Airlines (MWX) are counted as separate carriers.
A320-214 (3016, N639VA), Jazeera Airlines (JVI) leased.
September 2010: Virgin America (VUS) reported a second-quarter net loss of -$15.5 million, improved +1.6% from a -$15.8 million deficit in the year-ago period, on a +35.7% rise in revenue to $184.4 million. Pointing to (VUS)'s $430,000 operating loss for the period, significantly narrowed from a -$5.3 million operating loss last year, President & CEO, David Cush said that "top line progress continues to exceed our expectations as a young and growing airline." He added that (VUS) is "on track" to achieve "a full year operating profit in 2010."
(VUS) said it would have reported second-quarter operating income of +$10 million absent non-cash unrealized losses on fuel derivatives, turned around from a -$13 million operating deficit on a similar basis last year. It noted that it is 85% hedged for the second half of the year at $82 per barrel crude oil prices.
Second-quarter expenses heightened +30.9% to $184.9 million. Scheduled traffic rose +10% 1.54 billion (RPM)s on a +14.4% increase in capacity rose to 1.88 billion (ASM)s, producing a load factor of 81.9% LF, down -3.4 points. Yield lifted +27.8% to 10.86 cents as (RASM) jumped +22.7% to 9.8 cents and (CASM) spiked +18.3% to 9.82 cents. (CASM) ex-fuel decreased -7.9% to 6.26 cents.
Sahaab Aircraft Leasing, a subsidiary of the Jazeera Airways (JZI) Group, placed four A320s on long-term leases with Virgin America (VUS), the companies announced. The contract is valued at $155 million. This is the first lease to a USA-based customer by Sahaab, which was acquired by the Jazeera Airways Group in February 2010.
“We’re pleased to partner with Sahaab as we continue to grow aggressively and expand our network in North America,” (VUS) Senior VP & CFO, Holly Nelson said in the statement. Airbus announced at the Farnborough Airshow that it received "a nonbinding" (MOU) with (VUS) for 40 A320 family airplanes valued at $3.3 billion at list prices, plus a further +20 options.
A320-214 (4448, N835VA), (GEF) leased, ex-(D-AVVZ).
November 2010: Virgin America (VUS) achieved profitability for the first time in the third quarter, posting net income of +$7.5 million, reversed from a -$5.9 million net loss in the year-ago period.
Quarterly revenue soared +28% to $202.1 million, outpacing a +18.5% increase in expenses to $181.1 million, producing operating income of +$21 million, more than four times greater than a +$5.1 million operating profit in the September 2009 quarter. "Our progress toward profitability in just our third year of operations remains impressive, especially given both a global recession and a historic run-up in oil prices since our August 2007 launch," President & CEO, David Cush said in a statement. He added that (VUS) is attracting "a growing base of flyers who expect more from a USA airline" in terms of customer service. New, upcoming additions to its network include Dallas/Fort Worth and Los Cabos in December and Cancun on January 19. Cancun will be its 14th destination.
"We're continuing to see strong revenue performance into the fourth quarter and with continued industry capacity discipline, we're encouraged by the outlook," Cush commented. "(VUS) has seen significant increases in bookings and average fares in the fourth quarter of 2010, in line with the overall positive trends for the industry."
It plans robust future growth, signing a Memo of Understanding (MOU) during last summer's Farnborough International Airshow for 40 A320 family airplanes valued at $3.3 billion at list prices, plus a further 20 options. (VUS) projects that its fleet, comprised of 28 A320 family airplanes at the end of the third quarter, will "grow by two-thirds by the end of 2011 and triple in size by 2016."
Third-quarter traffic lifted +7.1% year-over-year to 1.64 billion (RPK)s on a +10.1% rise in capacity to 1.95 billion (ASM)s, producing a load factor of 84.3% LF, down -2.3 points. Yield improved +19.7% to 11.2 cents as (RASM) heightened +16.9% to 10.37 cents and (CASM) increased +8.1% to 9.29 cents. (CASM) ex-fuel was up +4.7% to 6.25 cents. (VUS) noted that its (CASM) ex-fuel was -4% lower through the first nine months of 2010 compared to the same period in 2009. It has 86% of its remaining 2010 projected fuel requirements hedged at a per barrel crude oil price of $82.
December 2010: Virgin America (VUS) launched daily, Dallas Fort Worth - San Francisco service on December 6. (VUS) launched five-times-weekly, San Francisco - Los Cabos service.
(VUS) is hiring 12 to 14 pilots (FC) per month for the forseeable future. The company is receiving approximately one airplane per month for the next five years.
January 2011: Virgin America (VUS) receives the Air Transport World (ATW) magazine's 2011 Passenger Service Award - - SEE ATTACHED - - "VUS-2011-01-ATW PASSENGER SVC AWARD."
Airbus (EDS) announced its 10,000th order with a firm contract from Virgin America (VUS) for 60 A320s, including 30 A320neo airplanes. This is the first firm order for the A320 new engine option; therefore (VUS) becomes the launch customer for the A320neo. This formalizes and expands an initial commitment given at the Farnborough International Airshow in July 2010 with the inclusion of the A320neo as a new development in that deal. The 30 A320s will feature fuel-saving large wing tip devices called Sharklets. (VUS) has not yet announced its engine choice on the newly ordered A320s or the A320neo. Seating configuration on the airplanes will be the same as its existing A320 fleet (146 - 149 seats) in a two-class configuration. “At just three years old and at a time when many carriers are contracting, we’re pleased to be growing and bringing our award-winning service to new markets,” said (VUS) President & CEO, David Cush. “We credit a great deal of our success to date to having the right airplanes. The low operating costs, cabin comfort and carbon-efficient design of our all-new A320 fleet has helped fuel our growth and success in the North American market – and we’re confident the A320neo will only build on that.”
“We hit our 5000th order in August of 2004 – after more than >30 years. To achieve the 10,000th order just over six years later is a ringing endorsement of our product line,” said Tom Enders, Airbus (EDS) President & CEO. “And it gives a strong boost to our new, eco-efficient A320neo when ‪(VUS), one of our newest and trendiest customers, places the first firm order, for which we are extremely grateful.”
“Virgin airlines are known around the world for innovation – for harnessing the best in design, technology and entertainment to reinvent the travel experience,” said Virgin Group Founder, Sir Richard Branson. “We’re just as committed to investing in the next generation solutions that will make air travel more sustainable. Climate change cannot be ignored by business, and I believe that we must rise to the challenge of combating it and find new and better ways of operating. The A320neo will help us get there, by lowering costs and reducing our impact on the environment. (VUS)’s existing A320s are now up to 25% more fuel and carbon efficient than the average USA fleet, and the A320neo promises to improve on the numbers even more.”
The A320neo responds to heightened customer environmental interest, offering a -15% reduction in fuel consumption. The option was launched in late 2010 for first deliveries in early 2016. Airlines have the choice between (CFM) International’s (LEAP-X) engine and Pratt & Whitney (P&W)’s PurePower (PW1100G) engine. In addition to fuel savings, the A320neo will benefit from a double-digit reduction in NOx emissions, reduced engine noise, lower operating costs and up to +500 nautical miles more range or two metric tons more payload. The A319, A320 and A321 models on which the new engine option is offered will have 95% airframe commonality with the A320 Family, thus the A320neo will fit seamlessly into the existing (VUS) fleet.
SEE ATTACHED RENDERING - - "VUS-2011-01-A320NEO ORDER."
February 2011: Virgin America (VUS) will launch service to Chicago O’Hare (ORD) from Los Angeles (twice-daily) and San Francisco (thrice-daily) on May 25. (VUS) first announced its intent to serve (ORD) in 2008, but was delayed due to gate availability, it said.
(VUS) is hiring 12 to 14 pilots (FC) per month for the foreseeable future. (VUS) is receiving approximately one airplane per month for the next five years.
March 2011: Virgin America (VUS) announced the appointment of Mark Bianchi as Senior VP Technical Operations. Bianchi is “an industry veteran with more than >27 years of hands on experience in air carrier operations, line and base maintenance, fleet management, regulatory compliance and quality assurance (QA),” said (VUS).
April 2011: Virgin America (VUS) enjoyed its first profitable reporting period in the 2010 third quarter but was unable to sustain the momentum in the fourth quarter, posting a -$25.1 million net loss, widened from an -$18.8 million net deficit in the 2009 December quarter and pushing the company to a -$68.7 million full-year net loss.
The 2010 deficit was narrowed from an -$80.8 million net loss in 2009. (VUS), which launched in August 2007, earned a +$7.5 million net profit in the 2010 September quarter. (VUS) pointed to strong revenue growth in 2010 (up +32.2% compared to 2009 to $724 million) as evidence that it is progressing toward profitability, and noted that the year's results were hurt by high fuel costs and severe winter storms in the USA northeast. "As a young airline still fueling growth, we continue to move in the right direction with our top line progress and revenue results, especially given the backdrop of global recession and an unprecedented run-up in oil prices since our 2007 launch," President & CEO, David Cush said. "We're seeing strong revenue performance in 2011 and with industry capacity discipline we remain encouraged by the outlook. Oil prices remain a concern and as a result we plan to tap the brakes slightly on our 2012 growth plans. That said, as a new airline we're still continuing to grow overall and look forward to expanding our network in major business and leisure travel destinations like Chicago." It will launch service to Chicago O'Hare from Los Angeles (twice-daily) and San Francisco (thrice-daily) from May 25.
(VUS), which operates 39 A320 family airplanes, said its fleet will nearly triple to 113 airplanes by 2019. (VUS) earlier this year placed a firm order for 60 A320s including 30 A320neos.
Full-year 2010 expenses rose +25.5% to $736.5 million, including a +65.3% leap in fuel costs to $246.7 million. (VUS)'s 2010 fuel expense was more than double any other of the company's cost categories. It said it has hedged 50% of its 2011 projected fuel requirements. Some 77% of its first-quarter requirements were hedged at an average crude oil price of $82 per barrel.
Operating loss for 2010 was -$12.4 million, narrowed from an operating deficit of -$39 million in 2009. 2010 traffic increased +15.1% year-over-year to 6.24 billion (RPM)s on a +16.9% rise in capacity to 7.65 billion (ASM)s, producing a load factor of 81.5% LF, down -1.3 points. Yield lifted +16.1% to 10.51 cents, as (RASM) heightened +15.6% to 9.46 cents and (CASM) grew +9.7% to 9.62 cents. (CASM) ex-fuel lowered -2.1% to 6.4 cents.
May 2011: See video "VUS-VIRGIN AUSTRALIA CABIN ATTENDANT EXCHANGE"
June 2011: Virgin America (VUS) reported a first-quarter net loss of -$44.6 million, widened from a year-ago deficit of -$35.5 million, owing to “investment in growth and increased fuel prices.”
Revenue climbed +37% year-over-year to $201.1 million, while expenses rose +37% to $230.6 million, producing an operating loss of -$29.5 million, widened from an operating loss of -$21.6 million in the prior-year quarter.
“Despite the financial challenges of growth and rising fuel costs in the first quarter, we remain pleased with our revenue performance and overall progress as a young airline in a significant growth phase,” said President & CEO, David Cush. “While we are disappointed that our operating results fell short of our expectations primarily due to fuel prices, we are encouraged that we were able to recover over half of the sharp fuel increase through revenue gains.”
Looking forward, Cush said, “Our strong sales performance and recent expansions to major business and leisure destinations such as Dallas/Fort Worth and Chicago forecast a strong overall picture for 2011 and beyond.”
(RASM) lifted +11.6% to 9.25 cents, while (CASM) grew +11.6% to 10.61 cents. Yield rose +13.2% to 11.13 cents. Average load factor was down -0.2 point to 75.7% LF.
(VUS), which operates a fleet of (CFM56-5B)-powered A319s and A320s, selected (CFM)'s next generation Leap-X engine to power 30 A320neo airplanes it has on order with deliveries beginning in 2016, becoming the first to choose the (CFM) offering for the re-engined narrow body.
The previous three engine selections on the A320neo were for Pratt & Whitney's (PW1100G) geared turbofan. (VUS)'s order also includes 30 standard A320s, which will be powered by (CFM56-5B) engines. (CFM) valued the total engine order at $1.4 billion at list prices.
The Leap-X is also powering COMAC (CCC)'s C919 slated to enter service in 2016. (CFM) promises a +15% fuel burn improvement compared "to today's best (CFM56) engines."
September 2011: Virgin America (VUS) will launch 5X weekly, San Francisco - Puerto Vallarta service on December 2. (VUS) will launch seasonal daily, Palm Springs service from San Francisco and New York (JFK) between December 15 - April 30.
October 2011: Virgin America (VUS) will upgrade its onboard services in the next year, with the launch of a higher-speed Gogo Wi-Fi connection. Beginning in the 2012 first half, (VUS)'s airplane Wi-Fi capacity will be improved by approximately four times the current performance with the integration of Gogo's next-generation ATG-4 service. (VUS) will be the first airline to offer Gogo's enhanced product, which adds a directional antenna, dual-modem and EV-DO Rev. B technologies.
(VUS) also announced it has chosen Lufthansa Systems (LHS)’s BoardConnect platform as its technology partner for the launch of the "Red" In-Flight Entertainment (IFE) system, "which will be the first of its kind in the domestic skies," (VUS) said. It is slated for launch in late 2012 and is under development. This month (VUS) launches back-end testing of the platform on a new A320.
"BoardConnect will allow Virgin America (VUS) to build a next iteration of "Red" that offers the best of both worlds: a larger, high-definition touch-screen seatback monitor with full Wi-Fi connectivity and a breadth of curated content unrivaled in the skies, along with the ability for flyers to use their own personal electronic devices to connect to the system pre-flight, in-flight and post-flight," (VUS) said.
A320-214 (4867, N845VA), ex-(F-WWDM), sold to Jackson Square Aviation and leased back.
December 2011: Virgin America (VUS) saw strong revenue growth for the 2011 third quarter, but higher fuel costs brought operating profit down by -$4.8 million to +$16.2 million and resulted in a -$3.3 million net loss.
(VUS) released its third-quarter results, reporting a +44% increase in operating revenue over the same period in 2010 and a 6% operating margin.
(VUS)'s (RASM) improved by +9% year-over-year, on a +32% (ASM) increase in capacity. Excluding new routes added in the past 12 months, (RASM) in (VUS)'s established markets improved by +17% year-over-year. However, total fuel costs for the quarter increased by +86% and (VUS)'s average price per gallon of fuel increased by +43% year-over-year. The increase in fuel costs was the primary factor in a -$4.8 million decrease in (VUS) operating income.
(VUS) also said it had raised an additional +$150 million in a new four-and-a-half year debt facility funded in December, further improving (VUS)'s cash position. (VUS) has also obtained lease financing commitments for 13 A320 family airplanes slated for delivery between October 2011 and September 2013. In addition, (VUS) has closed on a financing facility for the majority of its pre-delivery payment obligations due on the first 20 airplanes within its order of 60 A320s, scheduled to begin delivery in the summer of 2013.
In January, (VUS) announced a major fleet order that included 30 A320neos.
"This increase in liquidity supports our long-term vision and growth plans for Virgin America (VUS). In addition, we have fully funded our airplane capital requirements through the third quarter of 2013," (VUS) President & CEO, David Cush said.
Had fuel prices remained flat year-over-year, (VUS) said its operating profit would have been +$33 million higher in the third quarter.
Non-fuel (CASM) increased by +2% over the year-earlier quarter as (VUS) continued to invest in new airplanes and infrastructure to support its growth.
(VUS) started service from San Francisco to Puerto Vallarta, Mexico, its 15th destination overall and 3rd in Mexico after Cancun and Los Cabos. Later this month, it starts San Franciso to Palm Springs, California.
January 2012: Virgin America (VUS) hired 12 Flight Crew (FC) pilots in November and 10 in December. (VUS) is accepting pilot applications and expects to hire 20 pilots in January and 20 in February. The company anticipates delivery of 10 more airplanes in 2012 and 12 more in 2013 with another 160 pilots (FC) hired by June, 2012. See FltOps.com and FAPA.aero.
A320-214 (4991, N849VA), ex-(F-WWBB), (AWAS) (AWW) leased, and A320-214 (4999, N851VA), ex-(F-WWBR), (GCP) leased.
February 2012: Virgin America (VUS) will have its new Lufthansa Systems (LHS) BroadConnect in-flight entertainment and connectivity (IFEC) system linefit on new A320 family airplanes arriving from 2013 onwards. (VUS) announced last September the selection of Lufthansa Systems as the provider of its next-generation in-flight entertainment platform, Red. Installations will begin from late 2012 and remain on track.
Late last year, Lufthansa Systems said it was working with Airbus (EDS) to offer the (IFEC) system linefit on new (VUS) A320s. This will be the case from 2013, doing away with the need for retrofits.
(VUS)'s current (IFEC) system is supplied by Panasonic Avionics, and (VUS) has yet to decide whether to replace them with the new system.
Lufthansa Systems BroadConnect will allow travellers to stream content to their own devices as well as to seatback screens.
A320-214 (5004, N852VA), (ex-(F-WWDL), (GCP) leased.
March 2012: Virgin America (VUS) and Korean Air (KAL) have announced an interline agreement for travel on both carrier networks across North American, Asian and South American routes. From Seoul Incheon, (KAL) passengers will be able to connect at Los Angeles International Airport (LAX), San Francisco International Airport (SFO), Seattle-Tacoma International Airport (SEA) and Las Vegas McCarran International Airport (LAS) to several other Virgin America (VUS) destinations.
(VUS) will launch service to Portland, Oregon from Los Angeles (2X-daily) and San Francisco (daily) on June 5.
Gogo said its air-to-ground in-flight connectivity system achieved a program milestone, the installation of its 1,500th commercial airplane. For the year to date, the company has installed Gogo on more than >140 airplanes.
"This is a big milestone for Gogo and it's obviously big for passengers who want to stay connected at 30,000 feet," said Michael Small, Gogo's President & (CEO). "Since 2008, we've worked to get Gogo up and running on nine of our airline partners, which represent approximately 87% of Internet-enabled North American commercial airplanes."
Gogo can now be found on nine major airlines including on all domestic AirTran (CQT), Virgin America (VUS) and nearly all Delta Air Lines (DAL) and Alaska Airlines (ASA) flights. Gogo is also currently installed on more than >300 American Airlines (AAL) airplanes and on select US Airways (AMW)/(USA), Frontier Airlines (FRO), Air Canada (ACN) and United Airlines (UAL) flights. US Airways (AMW)/(USA) recently announced plans to expand Gogo service across the A320 (A319, A320 and A321) family and Embraer EMB 190 fleet. With this expansion, US Airways (AMW)/(USA) will have 90% of its mainline domestic fleet equipped with Wi-Fi Internet access, Gogo said.
April 2012: In the week following the release of the iPad, Gogo Director Airline Operations, Tim Lemaster said the Wi-Fi provider identified over >10,000 separate usages of iPads being used on board airplanes. The tablets continue to outpace cell phones and laptops 10 to one on airplanes, he said.
“The traditional In-Flight Entertainment (IFE)s are going to be squeezed down to a more long-haul market,” Lemaster said. He pointed out that Wi-Fi-enabled short-haul flights that take advantage of passengers’ own personal electronic devices (PEDs) could help the industry avoid buying and installing seatback systems. However, on a 3-hour flight, Gogo has seen the average passenger pushing 61 megabytes by themselves — - a challenging amount of data to support on multiple (PED)s. “It is a big challenge in the industry,” of “how to push more through the pipe, because the pipe is limited,” he said.
American Airlines (AAL) provides passengers with Samsung tablets on select routes, Manager (IFE), Erik Miller said. “Customers love them,” but he cautioned “there are pros and cons” to eliminating the seatback system altogether.
“Airlines used to take a year to 18 months looking at new airplanes, looking at new systems,” Lemaster said. “Is the right decision today to go away from a traditional (IFE)? It probably makes sense on a short-haul flight (people are already bringing on their own personal devices). I would say in the next three to five years, we will see that decision more and more, move away from the traditional (IFE).”
May 2012: Virgin America (VUS) and Taiwan's China Airlines (CHI) have agreed on a new interline partnership, allowing passengers on both airlines to travel across their respective North American and Asian routes. (CHI) is (VUS)'s 11th interline partner.
The partnership allows connecting passengers to purchase interline tickets for travel between the USA, Taiwan and beyond, effective last month. Under the deal, China Airlines (CHI) provides service from Taipei, Taiwan to Los Angeles and San Francisco airport. Also, passengers of both airlines can travel between Taipei and Virgin America (VUS) destinations including Boston, Fort Lauderdale, Philadelphia, New York and Washington DC.
Adam Green, (VUS)'s Director Network Planning says: "Strategic partnerships like this one with China Airlines (CHI) are critical to driving connections over our San Francisco and Los Angeles airport bases."
(VUS) named Jim Davis as VP Airports & Guest Services. Davis joins (VUS) with more than >25 years at Hawaiian Airlines (HWI), the former Northwest Airlines (NWA) and Delta Air Lines (DAL).
June 2012: Virgin America (VUS) is seeking USA Department of Transportation approval to code share with Virgin Australia (VOZ) on a series of (VOZ) routes within the USA. The code share will place the (VOZ) code on (VUS) services from Los Angeles (California) to Boston, Chicago, Dallas, Fort Lauderdale (Florida), Philadelphia (Pennsylvania), Portland (Oregon), Seattle, and Washington.
Once approved, this will be the first-ever code share agreement for (VUS), building on a 2009 interline agreement with (VOZ) that connected Australia and USA routes, according to a (VUS) statement.
(VOZ) serves 13 USA destinations via its code share with Delta Air Lines (DAL).
“The United States is a very important market for Australia; it is the third most popular international destination for Australian visitors and our fourth biggest source of overseas visitors to Australia,” (VOZ) Group Executive Alliances, Network & Yield Merren McArthur said.
Virgin America (VUS) has announced an interline agreement with Japan Airlines (JAL), connecting their networks across North American and Asian routes.
(VUS) has grown to 18 destinations and a fleet of 52 new airplanes since its launch in August 2007. It also has interline agreements with Virgin Australia (VOZ), Virgin Atlantic (VAA), Air New Zealand (ANZ), Emirates (EAD), Korean Air (KAL), Singapore Airlines (SIA), Cathay Pacific (CAT), South African Airways (SAA), El Al (ELA), Qantas (QAN), China Airlines (CHI), Ethiopian Airlines (ETH), Hawaiian Airlines (HWI) and Air Pacific APC).
(JAL) operates daily service from San Francisco to Tokyo Haneda and daily nonstop service from Los Angeles (a focus city for (VUS)) to (JAL)'s hub at Tokyo Narita (NRT), where travelers may connect to most major cities in Asia including Bangkok, Beijing, Hong Kong, Kuala Lumpur, Singapore, Seoul, Shanghai, and Taipei.
In addition, (JAL) serves (NRT) from Boston, Chicago O'Hare, and New York (JFK). Both airlines will transfer baggage between connecting flights to passengers’ final destinations.
July 2012: Virgin America (VUS) has reported a first-quarter operating loss of -$49 million, a -65% worsening compared to the -$29.5 million operating loss for the same period last year.
(VUS) cited fuel costs that were +47% higher, costs associated with capacity growth, and a transition to a new reservations system as reasons for the loss.
Revenues grew +33% to$267 million from $201 million. (VUS) ended the quarter with $111 million in unrestricted cash.
While capacity was up +29% year-over-year, (VUS) pointed out that total capacity increases were up +59% over the past two years. “This rapid growth established Virgin America (VUS)'s core network and provided an important base for (VUS)'s future success. This planned phase of accelerated growth will wind down in mid-2012, until (VUS)'s next major fleet order begins delivery later in 2013,” said.
"While we are disappointed that our operating results fell short of our expectations for the quarter, as a young airline we have to balance the need to grow in order to build our network and achieve economies of scale with the short-term costs of that growth," (VUS) President & (CEO), David Cush said.
Virgin America (VUS) has appointed John MacLeod as its new Senior VP Planning & Sales. MacLeod is formerly WestJet (WJI)’s VP Network Management & Alliances.
(VUS) grew its fleet from 38 to 51 airplanes in the quarter and said it expects to see an improved financial performance during the next year as newer markets mature.
August 2012: Virgin America (VUS) has launched the new key route between its main base in San Francisco (SFO) and the USA capital’s downtown airport Washington National (DCA). The flights, which are assigned the flights numbers VX1 (and VX2 on the return), are operated daily with (VUS)’s A320s in competition with United (UAL)’s also daily flights that launched in May. “As the only airline based in California, we’re pleased to bring new competition to this important (and currently underserved) route from the West Coast,” said (VUS)’s President & (CEO), David Cush. “We benefitted from a groundswell of community support in our bid to fly to (DCA). We know both business flyers and technologically-savvy leisure travelers will enjoy having a new nonstop flight option that allows them to stay connected and productive en route to our nation’s capital.”
September 2012: Virgin America (VUS) reported a second-quarter net loss of -$31.8 million, narrowed from a -$21.7 million loss in the year-ago period. First half net loss = -$108 million.
Second-quarter revenue rose +29% to $347 million. Operating expenses increased +28% to $351.4 million, producing an operating loss of -$4 million, narrowed from a -$6 million loss in the year-ago quarter. As of June 30, (VUS) hedged 58% of its expected fuel consumption for the rest of 2012.
(EBITDAR) rose +44% for the second quarter to $54.3 million from $37.6 million in 2011.
Traffic (RPM)s increased +27% on a +32% rise in capacity (ASM)s, resulting in a load factor of 80% LF, down -3 points on the year-ago quarter.
(RASM) lowered -2% for the quarter as (CASM) ex-fuel decreased -1.5%.
The company took delivery of one airplane, ending the quarter with a fleet of 52 A320 family airplanes.
“With improved margins in the second quarter, our investment in building our network over the past two years is beginning to pay off,” (VUS) President & (CEO), David Cush said. “With just one airplane delivery in the next 12 months, we will focus on maximizing the value of our network instead of managing additional growth. As we enter this period of slower growth, we expect the investment in our core network to continue to provide improved financial results,” Cush said.
However, in USA's highest revenue generating market: Los Angeles - New York (JFK), (VUS) flies six flights a day, whereas American Airlines (AAL) flies nine and Delta Airlines (DAL) seven. United Airlines (UAL) flies six and JetBlue Airlines (JBL) five. As regards Los Angeles - Dallas Fort Worth (DFW), (VUS) flies three daily compared to (AAL)'s 18.
In the last year (VUS) started routes to four new cities: Philadelphia, Portland, Puerto Vallarta, and Washington Reagan. Its next new route is New York (JFK) to Palm Springs, California.
November 2012: Virgin America (VUS) posted a third-quarter net loss of -$12.6 million, widened from a -$3.3 million net loss in the year-ago quarter. (VUS) President & (CEO), David Cush said (VUS)'s major challenge has been “managing significant growth into new markets during both a recession and an environment of historic oil price highs. All airlines have faced these same industry challenges, but none have done so as a brand new carrier fueling 73% 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.”
(VUS) said operating revenues were up +26.6% to $368 million, while expenses were up +28.4% to $352.2 million, producing an operating profit of +$15.8 million, down -2.4% year-over-year.
(EBITDAR) rose +23.6% in the third quarter to $74.9 million from $60.6 million in the year-ago period.
Virgin America (VUS) and Air China (BEJ) have signed an interline agreement offering seamless travel on the networks of both carriers across their respective routes in North America and Asia. (BEJ) passengers can connect from a (VUS) city to Beijing and beyond via San Francisco International Airport (SFO), Los Angeles International Airport (LAX) or John F Kennedy International Airport (JFK). Both airlines will transfer baggage between connecting flights to passengers’ final destinations.
Interline electronic tickets for (VUS) and (BEJ) connecting flights can now be booked through all the major Global Distribution Systems and via (BEJ)’s distribution channels.
(BEJ) VP North America, Dr Zhihang Chi said, “Our partnership with Virgin America (VUS) creates convenient connecting opportunities at Air China (BEJ)’s strategically important gateways in San Francisco, Los Angeles and New York. This expands and strengthens both our networks and benefits travelers from the United States and China.”
(BEJ) offers daily nonstop 777-300ER service from Beijing to San Francisco, California, and New York, plus double daily flights to Los Angeles, California. It is the only carrier with nonstop service between Los Angeles and Beijing. (BEJ)’s New York and San Francisco airplanes are scheduled to be upgraded to the 777-300ER in 2013.
Hawaiian Airlines (HWI) and Virgin America (VUS) have launched a code share agreement under which (HWI) has placed its code on (VUS) flights to Boston, Dallas, Fort Lauderdale, Washington DC; New York (JFK); Las Vegas; Los Angeles; Chicago; Philadelphia; Portland, Oregon; Seattle, and San Francisco.
(VUS) has reached an agreement to modify its Airbus (EDS) airplanes order. Under the revised agreement, (VUS)’s order for current engine option A320 airplanes will be reduced from 30 positions to 10, with delivery of those airplanes occurring in 2015 and 2016. In addition, (VUS) announced it will defer its 30 A320neo positions to new delivery dates in 2020 through 2022.
Traffic rose +23.8% to 2.69 billion (RPM)s on a +31% increase in capacity to 3.38 billion (ASM)s, producing a load factor of 79.6% LF, down -4.6 points. Yield increased +2% to 12.55 cents. (CASM) decreased -2% to 10.44 cents.
See video "Departure Date" - -
See video "VUS-LOFT LOUNGE TOUR" - -
January 2013: Virgin America (VUS) operated flights on the 3,800 km route from New York (JFK) to Palm Springs, California (PSP) on 22 December. (VUS)’s President & (CEO), David Cush, said: “The convenience of nonstop service is something that was missing from the New York market, so we’re pleased we can offer this additional option for Northeasterners needing a winter escape to the Desert.” Weekly services will be operated with A319s until late April.
(VUS) will launch 3X-daily service to New York Newark from San Francisco and Los Angeles on April 2.
Virgin America (VUS) has a lot in common with JetBlue (JBL) (the upscale service, the big-city hipness, the coastal bases, etc. But one makes money and the other doesn’t. So how does (VUS) redeem itself? Abandoning frenetic capacity expansion will surely help. But a new thrice-daily route between Los Angeles and Las Vegas probably won’t. The problem is, Southwest (SWA) already flies from LAX to Sin City 80 times per week. And Delta (DAL) flies it 64 times a week. And American (AAL) 35 times a week. And United (UAL) 34 times a week. And Spirit (SPR) 12 times a week. Talk about swimming in a tank of sharks!
American Airlines (AAL) has requested bankruptcy court approval for a deal to lease 15 slots at Newark Liberty International airport to Virgin America (VUS), as part of a larger plan to reduce its costs at the airfield. (AAL) would reject its existing agreements to lease four slots to Porter Airlines and 10 slots to United Airlines (UAL) through October 2019 in order to provide the slots to (VUS), according to a filing with the US Bankruptcy Court for the Southern District of New York on 2 January. It is seeking to end the leases on 30 March.
Virgin America (VUS) would pay (AAL) $10,000 per month for each slot, which is comparable to what Porter and United (UAL) pay, according to the filing. The new lease would be effective 1 April and run through October 2022.
(VUS) plans to begin service to Newark on 3 April with three daily flights from both Los Angeles and San Francisco. "We have contingencies in place to continue operating the full schedule into and out of Newark pending the bankruptcy proceedings," says Toronto-based Porter. Porter operates up to 13 flights per day between Newark and Toronto City Center airport as well as one flight per week to Mont Tremblant, Quebec.
The loss of ten slots would likely have a minimal impact on (UAL)'s large hub at Newark, where it has hundreds of slots.
(AAL) is also seeking approval of a new gate lease at Newark with the Port Authority of New York and New Jersey (PANYNJ), according to the filing. It would return three of its six gates in terminal A to the airport operator for a savings of -$25.4 million through the end of its contract on 31 December 2018.
Virgin America (VUS) would subsequently lease one of the returned gates from the (PANYNJ).
SEE ATTACHED FROM "AIRWAYS" MAGAZINE - - "VUS-2013-01 - UPDATE."
February 2013: Virgin America (VUS) will launch 4X-daily, Los Angeles - San Jose, California service on May 1. (VUS) will launch daily, San Francisco - Austin Bergstrom service on May 21.
March 2013: Virgin America (VUS) announced the appointment of Steve Forte as its new Chief Operating Officer, the company's first ever (COO). Forte will oversee Flight Operations, Aircraft Maintenance, Safety and Guest Services.
Forte joints (VUS) after serving as (CEO) of platform-based aviation software services company, iJet Onboard. He has more than >30 years of experience in the aviation industry, beginning as a pilot (FC) and eventually becoming a Senior Executive at United Airlines (UAL).
"We're extremely pleased to bring aboard someone with Steve's impressive depth of operational experience," said David Cush, (VUS)'s President & (CEO). "He brings both a wealth of technical skills and a breadth of aviation management experience that will further strengthen the operating excellence of Virgin America (VUS)."
Forte will begin his new position in April.
April 2013: Virgin America (VUS) started its 19-weekly A319 Las Vegas (LAS) operation from its focus city of Los Angeles (LAX) on 22 April. Despite offering this level of frequency, (VUS) will command less than <10% of weekly flights, when it starts operations, coming up against the combined might of five different carriers, both legacy and low cost carrier (LCC): Southwest Airlines (SWA) (79 weekly frequencies), Delta Air Lines (DAL) (62), United Airlines (UAL) (36), American Airlines (AAL) (35), and Spirit Airlines (SPR) (14).
See video "VUS - LAX - LAS LAUNCH" - -
May 2013: Virgin America (VUS) incurred a net loss of -$145.4 million for the full year 2012, widened from a net deficit of -$100.4 million in 2011, and followed those results up with a -$46.4 million net loss in the 2013 first quarter.
(VUS) added the 15th destination to its offering in Los Angeles (LAX) on May 1st, as it launched a new intra-state service. (VUS) offers 27 weekly frequencies on the 500 km route to San Jose, California (SJC), which it operates using A320s. Sir Richard Branson commented on the new route: “Compared with San Francisco International Airport, San Jose is nicer, more tech-friendly and easier to get to for Silicon Valley-based passengers. If we can give them the routes, also in longer markets, they will fly with us.” Competition is significant, as Southwest Airlines (SWA) (66 weekly flights), American Airlines (AAL) (42), Alaska Airlines (ASA) (20) and United Airlines (UAL) (12) are already present in the market connecting the two Californian locations.
(VUS) began 3X-daily, Los Angeles - Las Vegas, Nevada service. (VUS) began daily, San Francisco - Austin A320 service.
Shortly after Virgin America (VUS) reported losses for 4th Quarter 2012, Fiscal Year (FY) 2012 and 1st Quarter 2013, (VUS) added to its list of customer accolades by winning the top spot in customer satisfaction from Consumer Reports. It is a pattern that has been repeated throughout (VUS)’s six-year existence (constant praise for its innovative customer service and equally continuous elusive profits).
During the last year, (VUS) has made changes that it hopes will reverse its string of losses, including slowing its growth, reworking its network to withstand seasonal troughs, and attaining relief on some of its debts.
Even as the changes are largely in their infancy, sceptics are right to question (VUS)’s staying power and how (VUS) fits into the mature USA market place.
August 2013: Virgin America (VUS) has earned its first-ever second-quarter net profit, reporting net income of +$8.9 million, reversed from a net loss of -$31.8 million in the year-ago period.
While the San Francisco-based airline was profitable for the quarter, it still posted a net loss of -$37.5 million for the first six months of 2013. Since its inception in 2007, (VUS) has yet to post an annual net profit. During the second quarter (VUS)'s revenue per available seat mile, a basic measurement of how much revenue is generated per increment of capacity, improved by +7.8% compared to the second quarter of 2012.
"Our first ever second-quarter net profit and year-to-date operating income show that our company is now poised to produce meaningful profitability," said David Cush, President & (CEO) of Virgin America.
Cush said profitability is becoming more attainable after slowing the airline's growth from the "30%+ level of the past few years to a more sustainable rate."
Between 2010 and 2012, Virgin America (VUS) doubled the size of its fleet, adding 24 passenger jets, and does not plan on expanding its fleet size again until 2015, resulting from an Airbus (EDS) order for 60 A320s placed in 2011.
(VUS) does much of its flying between New York and San Francisco and Los Angeles. It has recently added San Francisco-to-Newark, New Jersery, which puts it in head-to-head competition with United Airlines (UAL), which has hubs in both of those cities. It's also flying to Anchorage this summer.
Its coast-to-coast flying has been met with fierce resistance from other airlines. JetBlue Airways (JBL) announced that it will add new first-class (F) cabins for transcontinental flights. And (UAL) went from nine flights per day to 15 between San Francisco and Newark.
Transaero (TRX) has added to its list of partners offering connecting flights in the United States by signing an interline agreement with California-based Virgin America (VUS), according to an official statement from (TRX). The agreement links (TRX) passengers flying out of Moscow to Virgin America (VUS) flights departing from Los Angeles and New York. Special pricing will be offered on some of the routes, according to (TRX).
From Los Angeles, (VUS)’s destinations in the USA include Washington, Boston, Fort Lauderdale, Orlando, Dallas/Fort Worth, Las Vegas, Seattle, Portland, and San Jose. Via New York, (TRX) passengers will be able to transfer onto Virgin America (VUS) flights to San Francisco and Las Vegas.
Meanwhile, USA travelers flying into Los Angeles or New York via Virgin America (VUS) will be able to continue their journey to Moscow on board a Transaero (TRX) flight.
Transaero (TRX) currently flies directly from Russia to the USA cities of New York, Los Angeles, and Miami. (TRX) also has existing partnerships with Singapore Airlines (SIA), Virgin Atlantic (VAA) and United Airlines (UAL) that offer connecting flights within the United States.
September 2013: FAPA . . . Future & Active Pilot Advisors.
See FAPA.aero: Pilot (FC) Career Conferences & Job Fairs
Note: The next Pilot Job Fair will be held in Chicago next month.
According to FAPA.aero, Virgin America (VUS) hired 8 flight crew (FC) in April, 8 in May, 12 in July and August, and 6 in September. (VUS) is expected to hire 45 - 50 (FC) this year. (VUS) will be opening a joint Newark (EWR)/New York (JFK) base in December to handle 50 (FC)s. (VUS) (FC) recruiters will be at the FAPA.aero (FC) Job Fair in Chicago in October.
November 2013: See video "VUS-SAFETY VIDEO IN TIMES SQUARE NY"
February 2014: Virgin America (VUS) confirmed it has gained four new slot pairs at Washington National Airport (DCA) as part of the American Airlines (AAL)/US Airways (AMW)/(USA) divestiture required by the carriers’ settlement with the USA Department of Justice (DOJ).
The (DOJ) agreed to drop its lawsuit against the (AAL) - (AMW)/(USA) merger if the airlines divested 52 (DCA) slot pairs. Southwest Airlines (SWA) and JetBlue Airways (JBL) previously confirmed they had won a combined 47 of the 52 slot pairs.
The four (DCA) slot pairs going to Virgin America (VUS) are believed to be the final pairs available as part of the divestiture. Though one slot pair has not been officially confirmed, "The Dallas Morning News" has reported it is a weekend-only slot pair won by (SWA).
Details of the bidding process for the divested slots have been kept confidential. (SPR) said it bid for some of the slot pairs, but was not willing to pay as high a price (not known) that was bid by (SWA), (JBL) and (VUS).
Virgin America (VUS) currently operates a daily flight between (DCA) and San Francisco. It also operates flights between Washington Dulles (IAD) and San Francisco, and between (IAD) and Los Angeles. It said it will announce how it will use the four new (DCA) slot pairs at a later date.
(VUS) President & (CEO), David Cush said, “The opening of access to these sought-after public assets is an infrequent occurrence at best, and the latest opportunity allows us to significantly expand our network.”
March 2014: Virgin America (VUS) posted a net income of +$10.1 million for the full year 2013, reversed from a net loss of -$145.4 million in 2012, its first full year of profitability.
Full-year operating revenue was up +6.9% to $1.43 billion, while expenses increased +1.5% to $1.34 billion, producing an operating income of +$80.9 million, reversed from an operating loss of -$31.7 million in the year-ago period.
(VUS) President & (CEO), David Cush called 2013 a year of “tremendous progress” for the carrier, which completed a restructuring in May 2013, eliminating more than >$300 million of debt and accrued interest, and reducing interest rates on a majority of the remaining debt. (VUS)’s traffic in 2013 rose +1% to 9.8 billion (RPM)s on a -2.2% drop in capacity to 12.2 billion (ASM)s, producing a load factor of 80.2% LF, up +1 point from 2012. Yield increased +7.2% to 13.1 cents. “We continued to reach more customers in more markets and now have a network presence from San Francisco and Los Angeles to most of the primary business centers in the USA,” Cush said. “Staying focused on creating a significantly better travel experience for customers and capitalizing on our strong route network helped us achieve +9.3% unit revenue growth. Revenue per available seat mile is a critical measure of success, and our impressive performance in this area, coupled with our efficient cost structure and improvements to our capital structure, led to three consecutive profitable quarters and our first full year of net income.”
(VUS) took delivery of one additional Airbus A320 in the first quarter of 2013, increasing its total operating fleet to 53 A320 family airplanes. (VUS)’s total order with Airbus remains at 40 A320 family airplanes, with five scheduled for delivery in the second half of 2015, five in the first half of 2016 and 30 starting in 2020.
For the second consecutive month, after 15 months of reported declines, full-time equivalent (FTE) employment at USA scheduled passenger airlines has registered a monthly increase year-over-year.
In February, USA scheduled passenger airlines employed 381,985 full-time workers, up +0.4% year-over-year, according to figures from the USA Department of Transportation’s Bureau of Transportation Statistics (BTS).
It was the third consecutive month in which full-time equivalent (FTE) jobs at USA scheduled passenger airlines increased year-over-year. The February total registers +1,571 more (FTE) jobs among USA scheduled passenger carriers than in February 2013.
Among the USA major/network carriers, year-over-year increases in February (FTE) jobs were seen at US Airways (AMW)/(USA) (up +3.6%), Alaska Airlines (ASA) (up +2.7%), American Airlines (AAL) (up +0.4%) and Delta Air Lines (DAL) (up +0.2%). United Airlines (UAL) reported losing -1.8% of its (FTE) positions year-over-year. Overall, the USA major/network carriers saw a +0.1% year-over-year increase in February (FTE) employees.
Hawaiian Airlines (HWI), a major carrier classified by (BTS) as an “other carrier” (airlines that operate within specific niche markets) reported a year-over-year February increase of +332 (FTE) positions, up +7.5%.
Overall, (FTE) positions at the major USA low-cost-carriers (LCCs) grew +0.7% year-over-year in February. Spirit Airlines (SPR) had the largest concentration of year-over-year growth, expanding its February (FTE) job count by +16.8%, to 3,534 (FTE) employees; Allegiant Air (WJE)’s monthly (FTE) job count grew as well, up +14.3% from February 2013, to 2,134 (FTE) employees. Increases also occurred at Virgin America (VUS) (up +6.7%) and JetBlue Airways (JBL) (up +4.9%). February (FTE) job declines were seen at Frontier Airlines (FRO) (down -7.4%) and Southwest Airlines (SWA) (down -1.7%).
Sun Country Airlines (SCA), a national carrier/(LCC) classified by (BTS) as an “other carrier,” registered a year-over-year February increase of +169 (FTE) positions, up +17.4%.
Ranked by (FTE) workforce, the top 10 passenger airlines for February were: United Airlines (UAL) (80,694 (FTE) employees), Delta Air Lines (DAL) (73,602), American Airlines (AAL) (59,699) (less US Airways (AMW)/(USA) - see later, Southwest (SWA) (45,091), US Airways (AMW)/(USA) (31,604), JetBlue Airways (JBL) (13,301), and Alaska Airlines (ASA) (10,192).
See video "VUS - TOTAL TEMPERATURE CONTROL" - -
April 2014: Virgin America (VUS) expands San Francisco - Austin service to 2x-daily from July 8.
Virgin America (VUS) will take on Southwest Airlines (SWA) at the Dallas-based airline’s home airport, launching flights from Dallas Love Field (DAL) in October. (SWA) controls 80% of the gates at (DAL), which has been limited by the Wright Amendment, a USA federal law that has restricted long-distance flying from the airport. But all Wright Amendment limitations will expire on October 13, enabling (SWA) to expand flying from its base airport starting in October. Virgin America (VUS) will also take advantage of (DAL)’s new freedom, announcing it will move operations from Dallas/Fort Worth International Airport (DFW) to (DAL) in October and start flights from (DAL) to four destinations.
More access to (DAL) was available because the USA Department of Justice (DOJ) required American Airlines (AAL) to divest two gates at the airport as part of an antitrust settlement, that cleared the way for the (AAL) - US Airways (AMW)/(USA) merger. (VUS) has been awarded those gates.
The (DOJ)-(AAL) settlement also required the divestiture of slot pairs at Washington National Airport (DCA), four of which were awarded to Virgin America (VUS).
(DCA) will be one of four airports to which Virgin America (VUS) will operate Airbus A320 family airplane flights from (DAL) starting in October. Others will include New York LaGuardia (LGA), San Francisco International (SFO) and Los Angeles International (LAX). (DAL) - (DCA), (DAL) - (SFO), and (DAL) - (LAX) flights will each be operated 3x-daily by (VUS) with (DAL) - (LGA) flights operated 4x-daily.
Virgin America (VUS) currently operates 3x-daily service between (DFW) and both (SFO) and (LAX). It appears those flights will transfer to (DAL) in October.
(VUS) President & (CEO), David Cush said, “More competition for Dallas flyers (and at an airport that is now monopoly-controlled [by Southwest]) will bring fare discipline and product choice to local travelers. Like in any industry, when there is more competition, consumers win.”
In 2015, (VUS) plans to expand (DAL) service, adding a fourth daily flight to (SFO), (LAX) and (DCA). Also in 2015, (VUS) will start 2x-daily service between (DAL) and Chicago O’Hare International.
June 2014: Virgin America (VUS) incurred a first-quarter net loss of -$22.4 million, narrowed from a net deficit of -$46.4 million in the 2013 March quarter, on a +4% rise in revenue to $313.4 million.
The quarterly net loss followed (VUS)' first full year of profitability in 2013. President & (CEO), David Cush pointed out the first quarter marked the sixth consecutive quarter in which Virgin America (VUS) has improved its financial results year-over-year. He also noted that (VUS) was hit hard during the quarter by the severe winter weather in the USA northeast since the transcontinental-oriented carrier generates 30% of its revenue from the New York market.
(VUS)’s first-quarter expenses rose +3.2% year-over-year to $326.5 million. Operating loss was -$13.1 million, narrowed slightly from an operating deficit of -$15 million in the 2013 March quarter. First-quarter traffic increased +5.6% year-over-year to 2.2 billion (RPM)s on a +3% lift in capacity to 2.78 billion (ASM)s, producing a load factor of 79.2% LF, up +1.9 points. Yield decreased -2.8% to 12.56 cents.
August 2014: Virgin America (VUS) reported a +$37 million net profit for the second-quarter, quadrupling (VUS)’s $8.9 million net income recorded in the year-ago June quarter. The successful second-quarter offsets (VUS)’s $22.4 million net loss in the first-quarter, bringing Virgin America (VUS)’s year-to-date (six-month) net income to +$14.6 million—a reversal from the -$37.5 million half-year net loss the company was posting a year-ago.
(VUS)’s second-quarter revenue grew +6.1% year-over-year to $398.8 million as expenses rose +1% to $351.7 million, resulting in operating income of +$47.1 million, a +69.1% rise from +$27.9 million in the year-ago quarter.
Virgin America (VUS)'s second-quarter traffic slipped -0.1% year-over-year to 2.7 billion (RPM)s. Capacity decreased -1.6% to 3.2 billion (ASM)s; the passenger load factor for the quarter came to 84.9% LF, up +1.2 point year-over-year. It carried 1.73 million passengers during the second quarter, down -0.1% year-over-year. Yield grew +5% year-over-year to 13.15 cents.
Virgin America (VUS) will increase its services that begin October 13 with 3x-daily from Dallas Love Field to Washington National, San Francisco, and Los Angeles to 4x-daily, each beginning April 29, 2015.
(VUS) appointed Brad Thomann as VP Flight Operations, effective immediately. The 30-year industry veteran has held a number of senior leadership positions at Virgin Australia (VOZ), Boeing (TBC), and United Airlines (UAL).
As of June 30, (VUS)’s fleet consisted of 53 Airbus A320s.
In May, (VUS) announced an agreement to sub-lease two gates at Dallas Love Field from American Airlines (AAL); service from Love Field to New York’s LaGuardia Airport, Washington National Airport, Los Angeles International Airport and San Francisco International Airport is due to commence in October.
On July 28 (just shy of the company’s 7th anniversary) Virgin America (VUS) filed a registration statement with the Securities & Exchange Commission announcing its intent to launch an initial public offering (IPO) of common stock in the company. The number of shares to be offered and the price range for the proposed offering are still to be determined.
Flight attendants (CA) at Virgin America airlines (VUS) approved representation by the Transport Workers of America union, with 58% voting in favor, the union said, citing a National Mediation Board tally. The decision ends the last non-union USA airline, and marks the first union at Virgin America (VUS), based near San Francisco and started by entrepreneur, Sir Richard Branson.
October 2014: About eight hours after San Francisco-based Virgin America (VUS) announced it would add two new winter routes from New York (JFK) and Boston Logan (two JetBlue Airways (JBL) hubs), (JBL) fired back, saying it will fly 2x-daily between San Francisco (SFO) and Las Vegas from January 5 with fares as low as $38 one way.
SEE VIRGIN AMERICA SAFETY VIDEO - -
November 2014: News Item A-1: Virgin America (VUS) reported 2014 third-quarter net income of +$41.6 million, up +24.2% from +$33.5 million the same period in 2013.
Third-quarter operating revenues were up +4.7% to $405.5 million. Expenses were $353.2 million, up +3% from the year-ago quarter, producing an operating income of +$52.3 million, up +17.9% year-over-year.
Despite the recent good news, (VUS) continues to have considerable debt. As of September 30, (VUS) said it owed $678.8 million in principal and interest to the Virgin Group and Cyrus Capital. The Virgin Group held about $471 million of that amount, according to the filing.
Traffic in the third quarter increased +2.8% to 2.69 billion (RPM)s on a -0.8% decrease in capacity to 3.22 billion (ASM)s, producing a load factor of 83.5% LF, up +3 points year-over-year. Yield was up +0.6% to 13.57 cents.
Two Airbus A320s will arrive in the third quarter of 2015, while another three will arrive in the fourth quarter. The new airplanes should allow Virgin America (VUS) to record +6% to +8% capacity growth in the fourth quarter on a year-over-year basis, according to the filing.
(VUS) will be well pleased with its timing in accessing the public markets as airline stocks are currying favor with investors after consistent capacity discipline and lower fuel prices have drawn attention to airline stocks, driving up the sector’s performance during (CY) 2014.
News Item A-2: Virgin America (VUS) has detailed its strategy in an amended prospectus.
(VUS) expects to make only slight increases in capacity for most of 2015 before ramping up operations as it puts new Airbus A320 airplanes into service toward year-end, (VUS) said in a filing with the USA Securities & Exchange Commission (SEC).
As the centreforaviatio.com extols:
INFORM. CONNECT. INSPIRE.
December 2014: See video "VUS-HIGHLIGHTS" - -
January 2015: News Item A-1: Virgin America (VUS) has revealed that pay raises for most employees and above-market fuel hedges through the second quarter, will push its 2015 costs above previous estimates.
News Item A-2: Air Transport World (ATW) Editor, Karen Walker in her (ATW) Editor's Blog titled "Not-So-Friendly Skies according to 2014 ranking of USA carrier performance:"
There’s an interesting article here by Wall Street Journal, "The Middle Seat" Editor, Scott McCartney, providing his annual scorecard on the performance of the eight biggest carriers in 2014.
The survey assesses the carriers on service parameters such as flight delays, cancellations, lost baggage and complaints (all of which increased last year, despite the USA airlines being in a much better financial position, McCartney pointed out.
His report showed that USA airlines canceled nearly +66,000 more flights last year than in 2013, and the percentage of canceled flights jumped to +2.7% from +1.9% the previous year, according to flight-tracking firm FlightStats Inc. The number of complaints filed with the Department of Transportation (DOT) over airline service, meanwhile, increased by a steep +26%.
Alaska Airlines (ASA) and Virgin America (VUS) score best; Delta (DAL) also stood out for a very good performance among the “Big Three” consolidated carriers.
American (AAL) and United (UAL), not so. Indeed, (UAL) is hunkered down in either last or second from last place on every ranking, making it the clear worst performer on all counts.
With carriers like (ASA) and Virgin America (VUS) changing the game in USA airline customer service, and Gulf carriers (with their excellent service reputations) growing their North American footprints on international routes, (UAL) has some real work to do. (Note to Jeff (Smisek): I know a man named Gordon (remember your previous leader, Mr Bethune at Continental Airlines (CAL), who famously took (CAL) from 'worst to first.' You may want to seek his advice).
Addendum: A colleague of mine recently boarded a Delta (DAL) 737-900ER at Detroit bound for Washington DC and texted me raving about the cabin. Mood lighting!, clean, comfortable seats!, in-seat video!, (USB) port!, - - Go Delta (DAL)!
February 2015: News Item A-1: Virgin America (VUS) earned net income of +$60.1 million in 2014, a significant increase over a net profit of +$10.1 million in 2013, marking (VUS)’s second straight year of profitability after five years of losses following its 2007 launch.
“We achieved record profitability and significantly strengthened our balance sheet by going public,” President & (CEO), David Cush said. “Both our existing and new investors have shown confidence in our low-cost, high-amenity business model.” (VUS) launched an initial public offering (IPO) in November 2014.
(VUS)’s 2014 revenue increased +4.6% year-over-year to $1.49 billion, outpacing a +3.7% rise in expenses to $1.39 billion, producing an operating profit of +$96.4 million, up +19.2% over operating income of +$80.9 million in 2013. (VUS)’s annual airplane fuel expenses decreased -1.6% to $499.1 million (fourth-quarter fuel expenses were down -4.8% year-over-year). (VUS)’s 2014 operating margin was 6.5%, up +0.8 point over an operating margin of 5.7% in 2013.
(VUS)’s 2014 traffic rose +2.6% year-over-year to 10.07 billion (RPM)s on flat capacity of 12.24 billion (ASM)s, producing a load factor of 82.3% LF, up +2.1 points. Yield improved +0.4% to 13.19 cents.
(VUS) expects to grow capacity +2% to +3% in the 2015 first quarter compared to the 2014 March quarter.
News Item A-2: The Port Authority of New York and New Jersey confirmed it is exploring altering the 1,500-mile perimeter rule at New York LaGuardia Airport, but most USA carriers said it is too early to consider what could mean for their networks, with one exception: Virgin America (VUS).
April 2015: News Item A-1: Virgin America (VUS) reported first-quarter net income of +$12.8 million, including $2.3 million in special charges for mark-to-market fuel hedge adjustments. The quarter’s results show a swing to profitability from the 2014 March quarter, at which time the airline posted -$22.4 million in net losses. Excluding the special items charged in the 2015 first-quarter, (VUS)’s net income was $10.5 million. The 2015 first-quarter was the first March quarter in the company’s eight-year history in which it posted a net profit.
Following the San Francisco-based airline’s initial public offering (IPO) in November 2014, and a reported net income of $60 million for full-year 2014, the first-quarter result “marks the 10th consecutive quarter of year-over-year improvement [in profitability],” (VUS) President & (CEO), David Cush said.
First-quarter operating revenue was $326.4 million, up +4.1% year-over-year (YOY); (VUS)’s operating income for the quarter came in at +$13.1 million, reversing the company’s (1Q) 2014 operating loss by +$35.4 million.
Virgin America (VUS)’s airplane fuel expenses decreased -23.5% (YOY) to $88.6 million. (VUS)’s first-quarter operating margin was 4.7%, swinging into positive territory (YOY) by 8.9 points.
First-quarter traffic was up +2.6% (YOY) to 10.27 billion (RPM)s on 1.5% (YOY) capacity growth to 2.81 billion (ASM)s, producing a load factor of 80.1% LF, up +0.9 point (YOY). Yield improved +1.4% (YOY) to 12.82 cents. Virgin America (VUS) carried 1.52 million passengers during the quarter, up +3% (YOY).
During the quarter, (VUS) began sales for its planned Hawaii routes. San Francisco - Honolulu service is slated to begin November 2, 2015, and San Francisco - Kahului, Maui service will start on December 3, 2015.
News Item A-2: "COMMENTARY: Data-based Personalized Service Drives Loyalty & Revenue" by Vinit Doshi, Senior VP Customer Sales & Service Solution for SabreSonic, part of Sabre Airline Solutions, April 27, 2015.
Sally is a 49-year-old mother of two, lives in an upper middle-class neighborhood and holds an advanced degree. Companies have been marketing to Sally and those like her for decades, but there’s a small problem: Sally doesn’t exist. She’s a sketch of a broad demographic (a mythological mom whose likes and dislikes are an amalgamation of data culled by market researchers and, all too often, pulled out of an executive’s intuition. There is nothing personal about Sally) and nothing personal about the service that companies provide based on the limited insights her amalgamated profile provides.
The airline industry can learn from leading service companies that have adopted a data-driven, personalized approach to market, sell and service their customers. Access to historical and real-time customer data and the tools to leverage it, mean that today’s business and marketing models must evolve past broad customer profiles and top executives’ business instincts. Delivering elite and personalized service (the kind that breeds customer loyalty) requires a 360-degree view of each customer’s past behaviors, preferences, interests, tendencies and purchasing decisions.
Perhaps the most visible example of a company on the leading edge of the personalization revolution is Disney. The Magic Kingdom is now using integrated data to deliver world-class customer service, while increasing revenue. New Magic Bands gather customer data in real-time and use it to deliver actionable intelligence to the parks’ employees. Customers can use the band - wristbands to access their rooms and to make purchases at the Disney parks, hotels and shops. It gathers data every time it’s used. But Disney isn’t the only one to harness customer data (all kinds of service industries from banking to hospitality and restaurants are riding the data-driven wave of delivering a tailored customer experience).
Compared to advancements in other service industries, the Airline industry is playing catch-up on the personalization paradigm shift. And customers notice the disconnect. A joint study by the "Economist" and Sabre shows that in 2014, 81% of airline executives believed their airline’s customer experience had improved, but 66% of customers said their experiences have stayed the same or gotten worse.
The opportunity for airlines to increase revenue, while also improving the customer experience and driving loyalty, is substantial. Improving the customer experience is rooted in data. Airlines can gather information from each “touch point” throughout the travel sequence, beginning with the customer’s first visit to a carrier’s website and continuing through check-in, in-flight purchases, baggage claim, and post-trip social media activity. Intelligent, data-driven customer profiles enable airlines to anticipate and respond to a customer’s preferences before he or she even thinks to ask. Window or aisle? One checked bag or two? Seat upgrade? Vegetarian option? Vodka martini at cruising altitude?
Data-driven, personalized customer service is the key to a true competitive advantage in today’s commoditized air travel industry. Most travelers will search for the lowest fare to their desired destination and online travel sites have made price comparison easy. Carriers that offer competitive, low-priced fares and can make up revenue by offering personalized add-ons to passengers based on the ancillaries that actually interest those passengers. At the same, the passenger gets the benefit of feeling like an individual whose preferences are understood and responded to.
Benefits for airlines go beyond winning price wars and generating additional revenue. Airline companies have used reward or loyalty programs for years in an attempt to solidify customer retention. However, flyers end up being more loyal to the rewards program itself than they are to the airline brand. This kind of loyalty only lasts as the passenger believes they have the best rewards program. As soon as a shiny new rewards program or credit card affiliated program with a different carrier comes along, the passenger makes a switch. True allegiance comes from building long-lasting customer relationships. Personalized service based on really knowing your customers is the lynchpin of that relationship.
California-based airline, Virgin America (VUS) gets it. (VUS) has developed a reputation for superb customer service and innovative amenities as a part of its goal to create an “experience unlike any other in the skies.” As part of its commitment to exceptional customer service, Virgin America (VUS) recently invested in three new, powerful data-driven, personalization tools.
(VUS) President, David Cush said, “We wanted technology that would help us better understand our guests’ needs, focus on their individual priorities, and create an experience they can’t get with any other airline. These new solutions give us invaluable insights into our guests to create tailored experiences that drive loyalty, and support our mission to make flying good again.”
So what does data-driven personalized service actually look like? With its highest-value customers identified, airlines can target those customers with offers based on their previous purchases and interactions with the airline. For example:
* Frequent flyer Paul is scheduled to travel from Los Angeles to New York (JFK), with a layover at Dallas-Fort Worth. When his flight out of (LAX) gets delayed two hours due to an electrical issue with the airplane, Virgin America (VUS)’s system proactively sends Paul an email letting him know that he has been compensated with travel points to make up for the inconvenience.
* Since his first flight is running late, and Paul is going to miss his connecting flight at (DFW), the system proactively rebooks Paul on the next connecting flight and sends him an email to let him know of the rescheduling and that he has been booked in a window seat, as is his preference.
* Once Paul touches down in Dallas, the gate agent identifies him as a high-value traveler at de-boarding and escorts him to his connecting flight at a different gate. The connecting flight that Paul is now on has been held a few minutes to allow Paul the time to make it on the airplane. This is a personalized customer experience that Paul is likely to remember.
Providing customer-focused, revenue-boosting insight is made possible by technology that exists today. Such tools enable carriers to gather and analyze rich data throughout a customer’s travel journey. When everything (from comparison-shopping and reservations, to check-in, baggage claim and social sharing) becomes an opportunity for real-time analysis and customer-centric action (both the customer and the bottom line win). Personalized service is the wave of the future. Don’t get stuck on the tarmac.
News Item A-3: "Airlines Want Maintenance Repair & Overhaul (MRO) Facilities To Help More With Data And Predictive Maintenance" by James R Asker, "Aviation Daily," April 15th, 2015.
When it comes to “predictive maintenance” and using the huge quantity of data that state-of-the art jet airplanes generate, airlines want better performance from maintenance, repair and overhaul (MRO) companies and suppliers. “We need to be getting away from the ‘no trouble found’ that drives everybody nuts,” said Ahmad Zamany, VP Technical Operations at Copa Airlines (COP).
Being unable to repeat in the hangar a fault found in line operations is a problem as old as airplanes, of course. But with modern health-monitoring systems, it is even more difficult (but more important, given airlines’ expectations) that (MRO)’s be able to determine whether a part should indeed be replaced. Just telling the airline “it’s still within spec,” will not cut it, he said. To put it bluntly, failure should not be the only option.
Zamany gave the example of an airplane’s health-monitoring system showing a valve is opening and closing slower than it had been. Is it about to fail, or would some sort of servicing restore it to speedy operations? Airlines want help figuring that out.
Lance Applegate, Director Fleet Engineering & Programs at Delta Air Lines (DAL), said the latest airliners may capture 500 MB of data about its workings on a single flight. Operators want help in sifting it. “It’s a matter of weeding out and deciding where you want to focus,” Applegate said. Zamany agreed, and added, “There are a lot of systems [health monitoring] doesn’t track. You still have to have hardcore engineering [capabilities].”
Those were among the points, representatives of three carriers made on a panel at Aviation Week’s (MRO) Americas convention and exhibition on a panel called “Customers Speak Out.”
The (MRO) industry certainly heard about pain points and desires for better performance. But (MRO)s also might have been reassured, hearing that carrier-(MRO) relationships are critical, and that a good one is like marriage (both sides need to work at it, openly and honestly).
Discussing key performance indicators (KPIs) that many airlines use to scrutinize their suppliers’ performance, Zamany said, “A lot of time you look, and the finger points back at you.” So, too, if an (MRO) is encountering difficulties, Applegate said, “we want to know about it.”
What is more, the basics will never change. Beth Medlen, Director Base Maintenance at Virgin America (VUS), said carriers would always like (MRO)s to improve on quality, cost and turnaround times. Staying on budget and meeting schedules is extremely important. But of the three, she said, “We can sacrifice a little on budget. We can sacrifice a little on schedule. But we cannot sacrifice quality and safety.”
May 2015: The intra-California market represents “untapped potential” for its network, Virgin America (VUS) told investors in a presentation.
June 2015: Virgin America (VUS) pilots (FC) have voted in favor of representation by the Air Line Pilots Association (ALPA), the National Mediation Board (NMB) has announced. Of the 95.7% of eligible pilots (FC) who voted, 75.3% voted in favor of joining (ALPA).
(ALPA) President, Tim Canoll said, the union is “poised to ensure that (VUS) pilots (FC) will gain a stronger voice for their future and, together, we will continue to advance our profession.”
The vote was the result of a focused campaign that began a year ago when a group of (VUS) pilots (FC) approached (ALPA) for potential union representation, (ALPA) said. In April, just three weeks after initiating the authorization for representation election card campaign, (VUS) pilots (FC) submitted an overwhelming number of authorization cards to the (NMB) seeking a representation election.
(ALPA) said it will begin working on negotiating the pilots (FC)’s first collective bargaining agreement.
July 2015: News Item A-1: "Virgin America (VUS) Posts (2Q) Net Income of $65 million" by (ATW) Mark Nensel, July 30, 2015.
Virgin America (VUS) posted second-quarter net income of +$65 million, up +75.7% from a net income of +$37 million in the year-ago period. (VUS) said it was the highest quarterly net profit in its eight-year history.
The 2015 second-quarter results include $552,000 in special charges for mark-to-market fuel hedge adjustments.
(VUS)’s second-quarter operating revenue was $400.9 million, up +0.5% year-over-year (YOY). Quarterly operating expenses fell -5.3% (YOY) to $333.2 million, resulting in operating income of +$67.7 million, up +43.6% (YOY). Aircraft fuel expenses were down -28.8% (YOY) to $93.7 million in the second quarter.
(VUS)’s second-quarter operating margin was 16.9%, up +5.1 points (YOY). Total traffic during the quarter was flat (up +0.1% (YOY)) at 2.72 billion (RPM)s. Capacity was similarly flat (down -0.1% (YOY)) at 3.2 billion (ASM)s; (VUS)’s resulting load factor for the quarter was 85.1% LF, up +0.2 point (YOY). The airline carried 1.81 million passengers during the quarter, up +4.4% (YOY).
Second-quarter yield was relatively flat (up +0.3% (YOY)) at 13.21 cents; (RASM) was down -0.6% (YOY) to 12.53 cents, (CASM) fell -5.3% (YOY) to 10.41 cents; (CASM) ex-fuel, special items and profit sharing was 7.27 cents, up +7.1%.
(VUS)’s fleet as of June 30 comprised 53 Airbus A320-family airplanes, the same as during the June 2014 quarter. (VUS) is scheduled to take delivery of five additional A320s during the second half of this year; one has already been delivered in July. Four of the new aircraft are expected to be placed into service by the end of the year.
News Item A-2: "Analyst, ViaSat See Future for Hybrid Antenna with Virgin America (VUS) Contract" by Juliet Van Wagenen, Avionics Today, July 23, 2015.
Virgin America (VUS) announced earlier this month that it will use ViaSat’s hybrid Ka/Ku solution to deliver In-Flight Connectivity (IFC) on its next 10 deliveries of A320s in a move that may be a harbinger for hybrid connectivity solutions everywhere. With (VUS)’s fleet already fully equipped with Gogo’s Air-to-Ground (ATG) solution, (ATG) 4, the move to ViaSat for a satellite solution will help equip aircraft flying its Hawaii routes for faster (IFC) as of 2016.
“We do believe that satellite Wi-Fi is the future and will help us keep pace with how people use the Internet today,” Ken Bieler, Director of Product Design & Innovation at Virgin America (VUS), told Avionics Magazine. “Every year travelers use more and more bandwidth and this new partnership opens up a new world of bandwidth options for guests, including the ability to stream video content in-flight.”
The Ka-band connectivity offered through ViaSat’s technology and delivered through its ViaSat 1 High Throughput Satellite (HTS) promises speeds of up to 140 gigabits per second, touted as 8 to 10x faster than any other in-flight Wi-Fi system (presumably including Gogo’s (ATG) 4). Furthermore, ViaSat’s satellite-based connectivity offers a path to providing (IFC) to (VUS)’s oceanic routes, specifically in light of Virgin America (VUS)’s plans to expand routes to Hawaii.
“ViaSat offered a Wi-Fi connectivity roadmap that would allow us to soon offer Wi-Fi service over the Pacific,” said Beiler. He also noted that (VUS) will continue to use (ATG) 4 on its current fleet of 53 aircraft but has “not yet made a technology decision in terms of future state of connectivity for these aircraft.”
This may not be an enormous contract loss for Gogo, which is in the process of launching its own satellite solution, 2Ku, with service slated to begin by the end of this year. However, it does send waves into the (IFC) market as the pool of un-equipped North American airlines runs dry and connectivity providers begin to butt heads over international competition.
“The most significant part of this announcement is that this represents the first instance of a carrier moving to a new connectivity provider that we are aware of,” explained Andrew Spinola, Senior Analyst at Wells Fargo, following the announcement underpinning that churn and contract losses are expected in any and every business. However, he makes note that the win is potentially big for ViaSat’s Ka/Ku antenna.
The hybrid antenna isn’t new, and has been in development with ViaSat since 2007, but Don Buchman, VP & General Manager of Commercial Mobility Business at ViaSat, notes that the market demand was relatively weak. The solution was originally developed with military and business aircraft applications in mind. In 2014, market interest and demand began to increase from government, general aviation, and commercial airline customers, and in July 2014, ViaSat conducted two airborne trials of the hybrid antenna on a Boeing 757 across three different satellite networks, connecting with six Ka- and Ku-band satellites. With Virgin America (VUS) signing on as the first commercial airline to operate in both Ku- and Ka-band satellite networks (with installation to begin immediately) it’s likely other commercial operators will also begin to equip with a hybrid solution.
“This is a meaningful win for ViaSat, because it is the first commercial win with the Ka/Ku solution, which was initially developed for the USA governmant,” Spinola explained. “ViaSat has been primarily considered a regional provider of aviation broadband within its Viasat 1 North American footprint, but the viability of the Ka/Ku solution makes ViaSat a contender outside of North America.”
While Buchman admits that the Ku solution may currently be somewhat immature, as with cell phone connectivity, customers are looking for ways to connect in every corner of the globe.
“Virgin America (VUS) was looking to expand their flight routes from the lower 48 to Hawaii, which seemed to match the Ku/Ka antenna product we were developing,” he said. “Today, many airlines have aircraft flying in these oceanic routes, where the faster service isn’t there yet, but they still want connectivity for it. Typical aircraft miles may only represent 10% of an airline’s fleet, but they still want to connect them. This is where our Ku/Ka antenna kicks in.”
ViaSat is in the process of extending its Ka-band footprint worldwide, according to Buchman, with an additional satellite, ViaSat 2, which is slated for launch toward the second half of 2016 and will enter service in 2017. The company today has a footprint in Europe and the USA, but the new satellite will extend ViaSat’s Ka-band coverage through Mexico, the Caribbean, and out to the southern tip of South America. It also covers Canada and the North Atlantic Tracks, where it connects with the satellite provider’s European partner, Eutelsat. This may hedge in on some of the international business Gogo has set its sights on with its upcoming 2Ku capability.
Despite the possible impending commercial success of the Ku/Ka antenna in North America, Buchman is focusing on the global connectivity ahead. “For us, the antenna technology is secondary,” said Buchman. “We think there’s demand for connectivity, whether it be from the airline or the aircraft itself. That demand is going to increase and what people want is connectivity with the right speeds to make the connectivity work, as well as the economics. When our next satellite launches in 2016, that will expand the footprint. If we go around the globe, then the antenna technologies need to follow.”
September 2015: News Item A-1: "Virgin America (VUS) (CEO) Predicts Big Fare Hikes by USA airlines in 2016" by (ATW) Aaron Karp, September 1, 2015.
Virgin America (VUS) (CEO), David Cush predicted big fare increases by USA airlines, and urged the USA government to protect the “competitive structure” of the industry. “My expectation is in 2016 and 2017, we’re going to see considerable increases in flight tickets [in the USA] simply because you have the Big Four airlines [American Airlines (AAL), United Airlines (UAL), Delta Air Lines (DAL), and Southwest Airlines (SWA)] controlling 85% of the market,” he told the Boyd Group International Aviation Forecast Summit in Las Vegas. “When you have an oligarchy, it operates as an oligarchy, which means lowering capacity and raising prices. What we’re going to see is higher fares across the industry.”
(VUS) is coming off its best-ever quarter financially in the second quarter, and the USA airline industry as a whole was highly profitable in the first half of 2015. But Cush said (VUS) and other smaller USA airlines face a major competitive disadvantage going forward, because the consolidated legacy USA airlines are squeezing them out of domestic USA regional flight networks, narrowing the number of passengers with access to the smaller airlines.
“In general, we’re favorable towards consolidation,” Cush said, but he added that the inevitable consolidation-driven “pricing pressure” hasn’t arrived yet. “The government allowed consolidation to occur, but it’s the government’s responsibility to make sure competition is there,” he said. “Giving low-cost carriers (LCC)s access to the regional feeds that the legacies have set up, is critical.”
Cush said it is “impossible” for airlines like Virgin America (VUS) to set up a regional domestic network to compete with the likes of (AAL), (UAL), and (DAL). Cush has sought to arrange interline agreements to allow (VUS) to place its code on legacy airlines’ hub-feeding domestic flights from smaller markets, but has been rejected. “(VUS) has no domestic interline agreements with any domestic carriers simply because they’ve refused us. We’ve asked all of them,” he said. “These guys understand their dominant position in the small markets and they’re cutting off competition.”
Asked what mechanism the USA government should use to remedy the situation, Cush said the Department of Transportation (DOT) could force (AAL), (DAL) and (UAL) to add the codes of carriers like (VUS) to their regional flights. “Part of the (DOT)’s mandate is to preserve competition and that’s a place the (DOT) has not done its job as well as it should have,” Cush explained. “Perhaps the government needs to step in. It’s important for 90% of the consumers that are not [living near] hub airports. For the total competitive structure of the airline industry, it’s very important.”
Cush emphasized that he doesn’t want to see the government picking winners and losers, but he wants it to ensure (AAL), (UAL), (DAL), and (SWA) don’t use their position to stifle competition with other airlines in the USA market. “Congress doesn’t have to get involved in telling airlines where to fly,” he said. “But the simple fact of the matter is, I’m from Shreveport, Louisiana, and we used to have five airlines operating into Shreveport. Now we have three. And you can’t fly to Memphis from Shreveport anymore.”
News Item A-2: Virgin America (VUS) believes it still has plenty of growth opportunities out of San Francisco and Los Angeles, cities where it already has the bulk of its capacity.
"We've only scratched the surface," said (VUS) (CEO) David Cush at the Cowen Global Transportation Conference. Cush said the two cities hold a lot of appeal to the airline as they are both "high wealth, high income" areas.
(VUS) already operates on most of the top 10 domestic markets out of San Francisco and Los Angeles. Exceptions are Denver from both cities and Honolulu from Los Angeles.
Cush said (VUS) has plenty of room to grow in the next 20 domestic markets, of which it is now now serving only a handful.
Out of San Francisco, some top markets that the airline does not currently fly to include Orange County, Atlanta, Phoenix, Philadelphia, and Minneapolis.
At Los Angeles, unserved markets include Atlanta, San Jose, Oakland, Phoenix, Minneapolis, Philadelphia, Salt Lake City, and Portland.
Cush has said previously that intra-California routes will play a role in (VUS)'s network growth. Besides Orange County, San Jose and Oakland, a number of Californian cities are among the top markets now unserved by (VUS). These include Long Beach out of San Francisco, and Sacramento out of Los Angeles.
Elsewhere in (VUS)'s network, Cush again hinted that (VUS)' Dallas Love Field - Austin route could be on the chopping block at some point in the future. (VUS) launched service on the short-haul route in April, choosing to hold off on service to Chicago O'Hare.
Cush says the Austin route has done what the airline was hoping it would do, which was to create feed traffic to Love Field for (VUS)' service to New York LaGuardia and Washington National. But he also acknowledges: "I don't think we necessarily consider that a permanent best use of those slots . . . there are some decisions that we probably have to make as we go forward."
(VUS) operates out of two gates at Love Field that it won last year, following a divestiture by American Airlines (AAL).
News Item A-3: "(NASA) Developed Technology Aims to Save Commercial Airlines Fuel, and Time" by www,aviationnews.eu Rob Vogelaar, September 23, 2015.
Two passenger airlines soon will test (NASA)-developed software designed to help air carriers save time and reduce fuel consumption and carbon emissions.
During the next three years, Virgin America (VUS) and Alaska Airlines (ASA) will use the "Traffic Aware Planner (TAP)" application - - see attached - - "VUS-2015-09 - Traffic Aware Planner.jpg," to make “traffic aware strategic aircrew requests” (TASAR).
“(TAP) connects directly to the airplane avionics information hub on the airplane,” said David Wing, (TASAR) project lead at (NASA)’s Langley Research Center in Hampton, Virginia. “It reads the current position and altitude of the airplane, its flight route, and other real-time information that defines the airplane’s current situation and active flight plan. Then it automatically looks for a variety of route and/or altitude changes, that could save fuel or flight time and displays those solutions directly to the flight crew (FC).”
(TAP) also can connect with the plane’s Automatic Dependent Surveillance-Broadcast (ADS-B) receiver and scan the (ADS-B) signals of nearby air traffic to avoid potential conflicts in any proposed flight path changes, making it easier for air traffic controllers to approve a pilot (FC)’s route change request.
For airlines with Internet connectivity in the cockpit, (TAP) also can access information such as real-time weather conditions, wind forecast updates and restricted airspace status, to further increase flight efficiency. The software is loaded onto a tablet computer, which many airline pilots (FC) already use for charts and flight calculations.
Wing and his team already have tested the (TASAR) software twice aboard a Piaggio P180 Avanti aircraft, a high-performance technology test bed owned and operated by Advanced Aerospace Solutions, (LLC) of Raleigh, North Carolina. The system worked well on its initial test flight from Virginia to Kentucky, according to its test pilot (FC), former airline captain, William Cotton. “We used it to make a route change request from air traffic control (ATC), which they granted,” said Cotton. “We got a shortcut that saved -4 minutes off the flight time.”
Even -4 minutes of flight time shaved off of each leg of a trip made by an airline, could result in massive fuel and time savings, according to researchers. The software provided similar results as flight tests continued in the northeast corridor. A second round of flight tests was recently completed to ensure readiness for operational use by partner airlines.
The (TASAR) flight tests came after a dozen pilots (FC) provided feedback on the technology in a simulation at the University of Iowa Operator Performance Laboratory in Iowa City, Iowa. In addition, aerospace systems manufacturer, Rockwell Collins of Cedar Rapids, Iowa, analyzed (TASAR) to make sure it is safe and can be readily certified by the Federal Aviation Administration (FAA).
“We’re excited to partner with (NASA) to test this new technology that has the potential to help reduce fuel consumption and carbon emissions and save our guests, time in the air” said Virgin America (VUS) Chief Operating Officer (COO), Steve Forte in Burlingame, California.
“Up until now there has been no way to deliver comprehensive wind and congestion data to pilots (FC) in near-real time,” said Tom Kemp, Alaska Airlines (ASA)’s VP Operations in Seattle, Washington. “(TASAR) is a ‘super app’ that will give our pilots (FC) better visibility to what’s happening now, versus three hours earlier, when the flight plan was prepared.”
Developers say the new technology won’t require changes to the roles and responsibilities of pilots (FC) or air traffic controllers, which would allow the system to be implemented fast, and start producing benefits right away. “The system is meant to help pilots (FC) make better route requests that air traffic controllers can more often approve,” said Wing. “This should help pilots (FC) and controllers work more effectively together and reduce workload on both sides from un-approvable requests. (TASAR) takes advantage of (NASA)’s state-of-the-art (TAP) software, flight information directly from the airplane and the emerging (ADS-B) and Internet infrastructure to help pilots (FC) get approved to fly the most efficient or time-saving trajectory possible.”
(NASA) researchers expect this and other aviation technologies under development will help revolutionize the national airspace system, reducing delays and environmental impacts, and improving passenger comfort and efficiency, even as the demand for air travel continues to grow.
News Item A-4: Virgin America (VUS) has signed an agreement with Internet TV company NetFlix that allows (VUS) to stream NetFlix’s full catalog of films and shows to passengers.
(VUS) is initially providing NetFlix programming free to customers via the seat-back (IFE) systems or passengers’ own tablets, laptops and devices. The ViaSat Wifi-based system became available from September 29 and created an industry first for the airline industry.
Virgin America (VUS) touted that popular series such as “House of Cards” and “Orange Is the New Black” will be available at no cost through March 2, 2016 for existing Netflix account holders. Passengers on aircraft equipped with the new ViaSat Wifi service will open their browsers, log in to their existing Netflix account or create a new account. Existing account holders pay no extra fees to use the service, while flying for five months, while new members can sign up for a free 30-day trial.
The new product offering came about after (VUS) forged a connectivity partnership with ViaSat for faster Wifi capability on 10 new Airbus A320 aircraft being delivered from fall 2015 to mid-2016.
(VUS) has dubbed the new (IFE) offering "#NetflixOnboard."
“Netflix and (VUS) are both known for their focus on innovation and for shaking up their respective industries, so we’re thrilled to team up to bring the best in technology and entertainment to the skies,” (VUS) VP Brand Marketing, Abby Lunardini said. “Even President Frank Underwood can’t get entertainment this good onboard Air Force One.”
October 2015: "Virgin America Reports $72 Million Net Profit in 3Q"
by (ATW) Mark Nensel, October 29, 2015.
Virgin America (VUS) reported +$71.9 million in third-quarter net income, up +72.7% from a net profit of +$41.6 million the year-ago quarter. (VUS)’s third-quarter operating margin was 18%, up +5.1 points year-over-year (YOY). Both figures are reportedly the highest-ever in Virgin America (VUS)’s eight-year history.
“We generated record earnings and margins in the third quarter,” (VUS) President & (CEO), David Cush said. “The drop in fuel costs was a big driver of that improvement with an average [with] cost per gallon, including hedges, dropping by about -38%.”
Year-to-date, as of September 30, (VUS)’s net profit stands at +$149.6 million, more than doubling the company’s net take during the same period last year; (VUS)’s operating margin year-to-date is 13.8%, up +7.7 points (YOY).
The third-quarter results include $1.1 million in special charges for mark-to-market fuel hedge adjustments.
Virgin America (VUS)’s operating revenue in the third-quarter was $410.9 million, up +1.3% (YOY). Operating expenses fell -4.6% (YOY) to $337 million, resulting in operating income of +$73.9 million, up +41.2% (YOY). Aircraft fuel expenses were down -35.1% (YOY) to $86.5 million.
Traffic demand was up +1.9% (YOY) to 2.74 billion (RPM)s as capacity increased +3% (YOY) to 3.32 billion (ASM)s. Load factor for the quarter was 82.5% LF, down -1 point (YOY). The airline carried 1.85 million passengers in the third-quarter, up +10.1% (YOY).
Third-quarter yield fell -1.8% (YOY) to 13.38 cents; (RASM) was down -1.6% (YOY) to 12.4 cents; (CASM) dropped -7.4% (YOY) to 10.17 cents but (CASM), excluding fuel, special items and profit sharing increased +11% (YOY) to 7.34 cents.
Virgin America (VUS)’s fleet as of September 30 comprised 55 Airbus A320-family aircraft; two of the five A320s scheduled for delivery this year were completed during the third quarter. The third A320 was delivered in October, and two more aircraft are due by year-end. Two of these aircraft will be placed into operations; (VUS) expects to increase its capacity by approximately +9.5% to 10.5% for the fourth-quarter, as compared to (4Q) 2014.
In July, (VUS) partnered with Carlsbad, California-based broadband provider ViaSat Inc to install Wi-Fi service on (VUS)’s next 10 A320 deliveries; installation of ViaSat’s hybrid Ku/Ka-band antenna began on (VUS)’s continental flights in September. The service utilizes the ViaSat-1, a high capacity Ka-band satellite capable of providing 140 gigabits-per-second connectivity and video streaming. To capitalize on the ViaSat arrangement, on September 29, (VUS) announced a deal with streaming content provider Netflix to allow new and existing Netflix subscribers access to the provider’s entire catalog of programming, via their phones, tablets, and laptops at no cost through March 2, 2016.
November 2015: News Item A-1: Virgin America (VUS) began daily services on the San Francisco (SFO) to Honolulu (HNL) city pair on November 2. United Airlines (UAL) and Hawaiian Airlines (HWI) will compete, offering 36 and daily frequencies respectively. The 3,853 km route will be flown by (VUS)’s A320 fleet. “Our loyal Bay Area travelers, and especially our "Elevate" frequent flyers, have been asking for an island escape for some time, and as of today they have a fresh option for their Hawaii travels,” said (VUS) President & (CEO) David Cush. “We are thrilled to be bringing our unique service to Honolulu and next month Maui, and we look forward to building lasting community ties with the state and people of Hawaii.” On December 3, (VUS)’s Hawaii schedule grows again with daily non-stop flights from San Francisco to Maui’s Kahului Airport.
News Item A-2: Virgin America (VUS) will add San Francisco - Denver service in March, a move that will give the low-cost carrier (LCC) service to each of the 10 most-popular destinations from San Francisco, as measured by daily passengers each way.
In September, Virgin America (VUS) told investors that an average of 1,153 passengers each day fly one segment between the two cities, making it the ninth-largest destination from San Francisco.
A (VUS) spokesman called Denver “one of the most requested destinations by our high-tech corporate accounts,” and noted that, like San Francisco, Denver is a “growing hub for tech companies and start-ups.”
After the route launch, (VUS)’s largest unserved markets from San Francisco will be Santa Ana, California, Atlanta, and Phoenix.
Virgin America (VUS) will fly three times most days on the crowded route between San Francisco and Denver. Usually, Frontier Airlines (FRO) has four flights, while United Airlines (UAL) has 10 and Southwest Airlines (SWA), four. In the past, other carriers generally avoided Denver because of its competitive situation, but that could be changing.
Delta Air Lines (DAL) said it would use its Delta Connection to fly 5x-daily roundtrips between Los Angeles and Denver, another crowded route with 1,398 passengers in each direction, according to first-quarter 2015 data cited by (VUS).
From Los Angeles, (VUS)’s other center of operations, Denver is one of two top 10 destinations (VUS) does not serve. The other is Honolulu, and that is not expected to change soon, as (VUS) does not believe its Sharklet-equipped Airbus A320s can make it to Hawaii from Los Angeles without considerable penalties.
In the past, (UAL) has been a fierce competitor, when (VUS) entered one of its important routes. That was particularly evident in 2013 when (VUS) started flying San Francisco to Newark, New Jersey.
But when (VUS) added service from San Francisco to Honolulu and Maui earlier this year, (UAL)’s response “seemed to be more rational,” (VUS) (CEO), David Cush said in May.
“What went on in Newark, I thought, was irrational—doubling capacity on a mature transcon market,” Cush said. “I think it was damaging to their bottom line. It was damaging to our bottom line, no doubt about it. Fortunately, we have a cost structure that allowed us to make a Newark a very profitable airport for us.”
December 2015: News Item A-1: Virgin America (VUS) commenced two routes, firstly on December 1, and then on December 3, starting with services on the 1,172 km airport pair from Las Vegas (LAS) to Dallas Love Field (DAL). The link from Nevada to Texas will be operated 12x-weekly on board (VUS)’s A319s, and will face direct competition from Southwest Airlines (SWA)’s 34 weekly flights.
The second service to be launched by (VUS) was between San Francisco (SFO) and Kahului (OGG). The 3,756 km domestic link to Hawaii will operate from the Californian hub on a daily basis facing two incumbent carriers. United Airlines (UAL) offers 29x-weekly flights between the two airports, while Hawaiian Airlines (HWI) also provides a daily service.
Virgin America (VUS) will use A320s on the latter of its two new routes.
News Item A-2: "Virgin America (VUS) Launches Code Share Agreement with China Southern Airlines (GUN)" December 29, 2015.
Virgin America (VUS) and China Southern Airlines (GUN) announced a code share agreement to offer seamless booking and travel between China, SE Asia and multiple (VUS) destinations across the (USA).
Under the new agreement, (GUN) will place its two-digit airline code (CZ) and flight numbers on a range of (VUS) routes operating from Los Angeles and San Francisco (including West Coast flights to and from Boston, Chicago, Dallas Love Field, Fort Lauderdale, Las Vegas, Newark, New York (JFK), Seattle, San Diego, and Washington DC). This partnership will bring expanded choice and convenience for travelers flying between (GUN)'s numerous Chinese and Southeast Asia destinations and the USA.
This agreement is unique in that (GUN) is the only airline offering non-stop service between Guangzhou and Wuhan and the (USA). This code share arrangement allows a one-stop booking process, a single ticket and one-stop check-in, including baggage handling, for the entire journey. Code share flights can be booked today via (GUN)'s website, call center (+86-4008695539-1-4), the Global Distribution System (GDS), and travel agents.
"China is a significant inbound and outbound tourism market and we are extremely pleased to partner with (GUN), Asia's largest carrier by fleet size, and an airline that shares (VUS)'s commitment to providing excellent, guest-focused service," said Adam Green, (VUS)'s Director of Network Planning. "We look forward to welcoming (GUN) guests on board our flights, as we provide them with our signature, award-winning (VUS) service to and from destinations across our USA route network."
"We are thrilled to expand our network further into the USA with (VUS)," said Mr Zhao Xiaosong, Senior VP International Affairs & Alliances of (GUN). "The USA is a substantial market for us and through this partnership we could offer our passengers more travel destinations via Guangzhou. We look forward to working closely with (VUS) in the future."
(GUN), which is headquartered in Guangzhou, offers daily flights from Guangzhou to San Francisco (3x-weekly with one stop in Wuhan), 10x-weekly from Guangzhou to Los Angeles, and daily flights from Guangzhou to New York. (GUN) has the most extensive network in China and in Asia and a strong presence in Europe and Oceania.
The agreement announced today builds and expands on (GUN)'s existing interline arrangement with (VUS). (GUN) is (VUS)'s sixth code share agreement and joins (VUS)'s growing partner portfolio. (VUS) offers mood-lit aircraft with three custom-designed classes of service, touch-screen personal entertainment and an on-demand food and cocktail menu on every flight. In addition to a Main Cabin that offers custom leather seating with a deeper, more comfortable pitch, (VUS)'s First Class (F) cabin offers plush white leather seating with 55 inches of pitch, 165 degrees of recline and lumbar massagers. (VUS)'s Main Cabin Select service offers 38-inches of pitch, free food and cocktails, an all-access pass to media, dedicated overhead bins and priority check-in/boarding.
The Red™ entertainment platform offers guests their own seat back touch-screen, with +20 latest release films, TV, interactive maps, video games, a 3,000 song library, surround sound technology and an on-demand menu, which allows flyers to order from their seat back any time during a flight. With a full service First Class (F) menu and a unique on-demand menu in the Main Cabin, (VUS) was named "Travel + Leisure" Magazine's "Best USA Airline for Food" in 2014 and 2015. (VUS) has also been a stand-out in the industry for its operational performance. For the past three years, (VUS) has been recognized as the number one ranked carrier in the Airline Quality Rating (AQR) report, an annual study of USA domestic airline performance conducted by professors at Wichita State University and Embry-Riddle Aeronautical University (measuring on-time performance, customer complaints, denied boarding and mishandled bags).
Since its 2007 launch, (VUS)irgin America has created nearly 3,000 jobs. As of March 15th, 2016, (VUS) will serve 24 destinations in the USA and Mexico.
* About Virgin America (VUS):
Known for its mood-lit cabins, beautifully designed classes of service and innovative fleet wide amenities (like touch-screen personal entertainment, WiFi and power outlets at every seat, (VUS) has built a loyal following of flyers and earned a host of awards since launching in 2007 (including being named both the "Best USA Airline" in both Conde Nast Traveler Readers' Choice Awards and "Best Domestic Airline" in Travel + Leisure World's Best Awards for the past eight consecutive years. (VUS) serves Austin, Boston, Cancun, Chicago, Denver (as of March 15, 2016), Dallas Love Field, Fort Lauderdale, Las Vegas, Los Angeles, Los Cabos, Newark, New York (JFK) and (LGA), Orlando, Palm Springs (seasonal), Portland, Puerto Vallarta, San Diego, San Francisco, Seattle, Washington D C (IAD) and (DCA), Honolulu, and Maui - Kahului.
* About China Southern Airlines (GUN):
Established in 1991, (GUN) is one of the three major carriers in mainland China, with over >100,000 employees around the globe. (GUN) ranks 1st in Asia and 3rd in the world with regards to traffic volume in 2014, with the highest safety record in China. Together with 19 SkyTeam (STM) members, (GUN) connects passengers with 16,000 daily flights to over >1,052 destinations in 177 countries and regions. (GUN) has been awarded as a Skytrax 4 star airline, with continues efforts to provide passengers seamless and attentive travel experience.
News Item A-3: Baggage fees revenues for USA airlines in (3Q) 2015 rose +6.2% year-over-year, to $1.02 billion, according to the USA Bureau of Transportation Statistics (BTS). It is the first time third-quarter baggage fee revenues have surpassed the $1 billion threshold.
In contrast, reservation cancellation/change fees revenues for the 11 major USA reporting airlines plus two other carriers (Sun Country Airlines (SCA) and Island Air Hawaii) were down -0.4% year-over-year (YOY), to $755.2 million.
In figures released December 15 by the (BTS), a USA Department of Transportation agency, American Airlines (AAL)’s (3Q) revenue figures in both categories reflected the consolidation of its reporting following its merger with US Airways (AMW)/(USA), with extreme (YOY) boosts in revenue: for baggage fees, (AAL)’s revenue grew +88.5% (YOY), while for reservation cancellation/change fees, its revenue grew +51.7% (YOY). Looking more closely, however, if the (3Q) 2014 revenues from both airlines are combined and contrasted to the consolidated (AAL) (3Q) 2015 revenue, the (AAL)'s (YOY) changes are more realistic, with baggage fee revenue rising +3.9% (YOY), and reservation cancellation/change fee revenue falling -2.7% (YOY).
For third-quarter baggage fee revenues, after American Airlines (AAL)’s $292.1 million in revenue, Delta Air Lines (DAL) earned the most, with $236.9 million in revenue, virtually flat with its (3Q) 2014 total. United Airlines (UAL) was next, with $184.7 million in revenue, up +2.2% (YOY).
Four of the five reporting low-cost-carriers (LCCs) showed remarkable jumps in (3Q) 2015 baggage fee revenue. JetBlue Airways (JBL) reported $42.7 million in (3Q) baggage fee revenue, up +86.6% from $22.9 million in (3Q) 2014. Allegiant Air (WJE), Spirit Air Lines (SPR) and Frontier Airlines (FRO) all saw (YOY) baggage fee revenue growth of +25.2%, +23.5% and +22.6%, respectively. Virgin America (VUS)’s (3Q) baggage fee revenue fell -1% (YOY).
Southwest Airlines (SWA) reported a -34.9% (YOY) drop in baggage fee revenue, earning $11.5 million during the September quarter (compared to $17.7 million in (3Q) 2014). (SWA)’s baggage policy allows two checked pieces of baggage per customer. Excess baggage on (SWA) starts at $75 per item one-way.
(DAL) brought in the most revenue for reservation cancellation/change fees during the third quarter with $230.9 million, up +2.1% (YOY). Following (AAL)’s $217 million in revenue, (UAL) reported $202.2 million in revenue, down -4.2% (YOY).
Low Cost Carriers (LCC)s (FRO) and (WJE) both had notable increases in revenue for reservation cancellation/change fees during the quarter. (FRO)’s revenue was up +41.2% (YOY) to $9.3 million, while (WJE)’s was up +31.7% (YOY) to $2.7 million. Minneapolis-based, Sun Country Airlines (SCA) reported reservation cancellation/change fees revenue of $3.8 million during the quarter, over >5 times what the airline earned in (3Q) 2014.
News Item A-4: (GE) Capital Aviation Services (GECAS) (GEF) has signed an agreement with Virgin America (VUS) to lease 10 new Airbus A321neos. The aircraft, which will be powered by (CFM)’s (LEAP-1A) engines, will expand (VUS)’ fleet. The first aircraft is scheduled for delivery in (1Q) 2017 and the remainder will deliver in 2017 and 2018. All 10 aircraft are part of (GECAS)’ existing orderbook with Airbus (EDS).
(VUS) President & (CEO), David Cush said, “Not only will these aircraft allow us to further reduce our unit costs and improve our revenue position, they demonstrate our continued commitment to reducing carbon emissions and creating an even more sustainable airline.”
News Item A-5: San Francisco-based, Virgin America (VUS) currently operates a fleet of more than >55 aircraft to more than >20 destinations in the USA and Mexico.
January 2016: Virgin America (VUS) expects the USA Department of Transportation (DOT) to approve its recent petition to remove the limit governing how many aircraft (VUS) can fly.
February 2016: News Item A-1: Virgin America (VUS) reported a 2015 net income of +$340.5 million, a more than fivefold increase over a +$60.1 million net profit for 2014.
(VUS) President & (CEO), David Cush said, “We achieved the highest net income in company history, generated significant operating cash flow, continued to outperform the industry in domestic unit revenue growth, and began growing the airline again.”
(VUS)’s 2015 revenue increased +2.7% year-over-year to $1.53 billion, while expenses were down -3% to $1.352 billion, producing an operating profit of +$177.2 million, up +83.8% year-over-year. Its annual aircraft fuel expenses decreased -30.3% to $347.7 million.
(VUS)’s 2015 traffic was up +3.6% year-over-year to 10.44 (RPM)s on a +3.7% increase in capacity to 12.69 (ASM)s, producing a load factor of 82.2% LF, down -0.1 point year-over-year. Yield fell -1.4% to 13.06 cents.
Virgin America (VUS)is scheduled to take delivery of two Airbus A320 aircraft during the first quarter of 2016. (VUS) said it expects capacity, as measured by available seat miles, to increase +14% to +16% for the first quarter of 2016 compared to the year-ago quarter.
News Item A-2: Virgin America (VUS) will begin service to Hawaii from Los Angeles in May. (VUS)'s daily service to Honolulu from Los Angeles starts on May 5, followed by a daily service to Kahului, Maui, on June 14.
March 2016: News Item A-1: "Virgin America (VUS) in Buy-out Talks with Alaska (ASA), JetBlue (JBL)" by (ATW) Aaron Karp, March 29, 2016.
Virgin America (VUS), which started operations out of San Francisco in 2007, is reportedly in talks to sell itself to either the Alaska Air Group or USA independent, JetBlue Airways (JBL).
Bloomberg first reported the discussions, citing unnamed sources.
According to multiple media reports, the sales talks are being driven by Cyrus Capital and Sir Richard Branson’s Virgin Group, which together own a majority of (VUS), the San Francisco-based airline’s shares. The Virgin Group originally had a 25% stake in (VUS) and Branson was front and center, when Virgin America (VUS) launched, promising to improve upon the USA airline industry’s “abysmal” service.
While (VUS), an all-Airbus A320 operator, has gained plaudits for its mood-lit cabins and customized leather seats, it struggled for years to turn a profit, finally moving into the black in 2014. It raised more than >$300 million in an initial public offering (IPO) in November 2014.
Virgin America (VUS), (CEO), David Cush said at an industry conference last year that Virgin America (VUS) and other smaller USA airlines face a major competitive disadvantage because the consolidated legacy USA airlines (American Airlines (AAL), Delta Air Lines (DAL), and United Airlines (UAL)) are squeezing them out of domestic USA regional flight networks, narrowing the number of passengers with access to the smaller airlines.
New York-based, JetBlue (JBL) earned a +$667 million net profit in 2015. Seattle-based Alaska, parent of Alaska Airlines (AAL) and Horizon Air, reported net income of +$848 million in 2015.
News Item A-2: "If Virgin America is For Sale, Would a Deal be Allowed?" by Karen Walker in (ATW) Editor's Blog, March 30, 2016.
The potential prospect of Virgin America (VUS) being merged with either Alaska Airlines (ASA) or JetBlue Airways (JBL) is intriguing. The question many industry observers are asking is “which is the best fit?” and the general consensus is that (JBL) would be the better match.
But a more important question, if a deal were struck with either airline, is whether USA regulators would let another airline merger happen?
On paper, (JBL) is seen as the better fit for (VUS) because of the fleet commonality (both operate A320 family aircraft, whereas (ASA) operates Boeing 737s. There’s also good network synergy. Take a look at (VUS)’s route map, and (JBL)’s. (VUS)’s west coast and (JBL)'s east coast respective strengths play to each other; combine them, and each gains greater access (and a larger combined market share) to some of the USA’s most important and congested airports. In particular, the transcontinental routes of both airlines would be boosted (a desirable outcome in terms of their ability to compete with the three consolidated majors: (AAL), (DAL), and (UAL).
(VUS) also extends (JBL)’s reach into Hawaii and Baja California/western Mexico, while (VUS) benefits from (JBL)’s extensive Florida and Caribbean routes.
There’s also a “culture synergy” (both carriers are known for their good service at competitive prices and unique products. (JBL) continued to give complementary snacks, long after the legacy majors stopped handing out free peanuts (and the (JBL) basket of goodies is packed full of choices). It was a USA airline pioneer in providing free DirectTV service at every seat from launch, and recently introduced an attractively-priced lie-flat seat service (labeled "Mint") on some of its transcontinental routes. Similarly, (VUS) introduced Americans to in-seat combined (IFE) and service systems that allow passengers to view a wide array of movies and TV programs, and order drinks and meals, when they want them.
However, I would add that, leaving aside the fleet commonality and east-west bases, (ASA) has a similar service culture and “pioneering” spirit. And for all three of these independents, finding ways to grow, now that the consolidated majors control some 80% of the USA domestic market, is a tough proposition.
But even if there’s a willingness by either (JBL) or (ASA) to strike a deal (and assuming it is palatable to (VUS)), it could well come unstuck in Washington. For starters, the USA Departments of Transportation & Justice both seem to have misgivings about allowing the merger-acquisitions of Delta (DAL) - Northwest (NWA), United (UAL) - Continental (CAL), Southwest (SWA) - AirTran (CQT), and American (AAL) - US Airways (AMW)/(USA). Indeed, the (DOJ) tried to block the (AAL) - USAir (AMW)/(USA) deal, and last year launched an antitrust investigation into alleged capacity planning collusion by the majors. The government is also under pressure from lawmakers who couple airline industry consolidation with record profits and equate that, in their eyes, with poorer service.
Therefore, any new moves towards further airline consolidation would be put under a tough regulatory spotlight. At the very least, getting merger approval is likely to be a protracted process involving multiple congressional hearings and perhaps demands for more “pro-consumer” legislation. Even though the market share and network of a combined (VUS) - (JBL) (or, for that matter (VUS) - (ASA)) would still be dwarfed by the four majors, the phrase “airline consolidation” is now a highly unpopular one inside the Beltway.
April 2016: News Item A-1: The Alaska Air Group, parent company of Alaska Airlines (ASA) agreed on April 3rd to purchase San Francisco-based Virgin America (VUS) for approximately $2.6 billion.
Presently (ASA) operates 147 Boeing 737s and (VUS) has 60 Airbus A320 jets. (ASA) will leapfrog JetBlue Airways (JBL), which it was competing with in the bidding for (VUS), to become the 5th largest USA airline, after American Airlines (AAL), Delta Air Lines (DAL), and United Airlines (UAL).
San Francisco will become a second major California hub for Alaska Airlines (ASA), which now flies many routes from Los Angeles.
From its main hub in San Francisco and a secondary hub in Los Angeles, Virgin America (VUS) presently flies up and down the West Coast, as well as to Hawaii and to vacation resorts in Mexico, plus transcontinental routes to Chicago, Boston, New York, Washington DC, and Florida destinations.
See attached - "VUS-2016-04 - Virgin America Purchased-A/B/C.jpg."
News Item A-2: "Alaska: (SFO), (LAX) Assets Key in $4 Billion Deal to Buy Virgin America (VUS)" by (ATW) Aaron Karp, April 4th, 2016.
The Alaska Air Group cited gaining a strong foothold in California as the primary driver in its proposed $4 billion acquisition of San Francisco-based Virgin America (VUS), which the Seattle-based carrier said gives it the opportunity to become the leading domestic-services airline on the USA West Coast.
The merger deal, announced April 4 and still needing regulatory approval, calls for (ASA) to buy (VUS) for $57 per share, or $2.6 billion. Alaska Air Group, parent of Alaska Airlines (ASA) and Horizon Air, will additionally take on $1.4 billion in debt and aircraft lease obligations from (VUS), creating a $4 billion enterprise value for the transaction.
“We’ve been thinking about this for a long time,” (ASA) President & (CEO), Brad Tilden told analysts and reporters in an early morning April 4 conference call. “We originally reached out [to Virgin America (VUS)] in October or November of last year. I don’t think of this as defensive. We feel we’ve done really well with the footprint we have in Seattle, Alaska and the state of Oregon, and we just wanted a little more canvas to work with. I think this just makes our company much, much stronger. California has 39 million people. We think we can generate the loyalty throughout the whole USA West Coast that we have now in the [USA] Pacific Northwest and Alaska.”
New York-based, JetBlue Airways (JBL) later joined in the pursuit of Virgin America (VUS) and the competition for (VUS) was “hard fought,” Tilden said. (ASA) (CFO), Brandon Pederson said that “an auction-type atmosphere” ensued as (ASA) and (JBL) bid for (VUS), with (ASA) ultimately prevailing. (ASA) executives would not comment on how much the bidding drove up the $57 per share acquisition cost. ((VUS)’s share price stood at $38.88 when markets closed on Friday, April 1, though it quickly shot up, when the merger deal was announced on April 4.)
(ASA) is aiming for (VUS)’s shareholders to approve the transaction by June, to gain approval from the USA Department of Justice (DOJ) in the 2016 third quarter, close the deal by January 1, 2017, and move to a single operating certificate by early 2018.
(ASA) anticipates that the merger will generate $225 million in annual synergies, with 80% coming on the revenue side and 90% of the synergies in place by 2019. One-time integration costs are expected to be between $300 - $350 million, according to (ASA). A combined Alaska (ASA)/Virgin America (VUS) projects annual revenue of around $7 billion. (ASA) said it “expects the transaction to be accretive to adjusted earnings per share in the first full year, excluding integration costs.”
The combined fleet would number about 280 airplanes (including Horizon’s regional fleet), but Alaska (ASA)’s mainline fleet has long been all Boeing 737s, while Virgin America (VUS) is an all-Airbus A320 family aircraft operator with 60 A320 family aircraft in its fleet currently. It also has 40 A320neo family aircraft on order with deliveries starting in 2017, though most of the neo deliveries are slated for after >2020.
“We have no experience with the Airbus (EDS) fleet, so that will be a challenge,” Alaska Executive VP & (COO) Ben Minicucci said. “Although we love having the single fleet [of 737s], we’ll be learning about the Airbus (EDS) fleet.”
But Pederson indicated (ASA) could move away from the Virgin America (VUS) fleet if it chose to do so. “Essentially all of the [Virgin America (VUS)] fleet is leased and those leases start to roll out starting in 2020,” he said, adding that there is a “favorable cancellation provision” on (VUS)’s A320neo order.
Pederson described the (VUS) fleet as “a great fleet of fuel efficient young aircraft” that (ASA) officials are “going to get to know.” It will be “probably years” before (ASA) makes a decision on whether to retain any or all of (VUS)’ A320 family fleet, he said.
Indeed, Virgin America (VUS)’s aircraft were not the primary attraction for Alaska (ASA). Being able to have a major presence in Seattle (SEA), San Francisco (SFO), and Los Angeles (LAX) was the key for (ASA). “Los Angeles and San Francisco are very, very constrained [airports],” (ASA) Executive VP & Chief Revenue Officer (CRO), Andrew Harrison said. “We couldn’t have done this [kind of growth at (SFO) and (LAX)] organically for several years.”
Harrison noted that (ASA) has a “significant loyalty base already in California,” but didn’t have access to the infrastructure needed to properly serve those customers. “California is a very large state with a lot of carriers in there, and a lot of competitors,” he said. “Credit to Virgin America (VUS): They have done a very good job at building a network from slot-constrained airports” in California to the USA East Coast.
“I think this acquisition gives you a foothold [in California] that would be very, very difficult to build organically,” Tilden added.
(ASA) noted that the transaction will also “open up growth opportunities” at slot-constrained East Coast airports, including Washington National, New York LaGuardia, and New York (JFK).
Tilden emphasized that (ASA) has no ambitions to become a transpacific or transatlantic operator, but noted that having a footprint at (SFO), (LAX) and (SEA) gives it “more leverage” with international airlines already partnered with (ASA) or (VUS) or wanting to interline with the post-merger Alaska (ASA).
(VUS) (CEO), David Cush noted that “seven out of our top 10 corporate customers are tech companies [with employees] that travel up and down the West Coast and across the country” and said the merger will benefit these passengers, adding, “There’s a much bigger symbiotic relationship between the three big West Coast cities [Seattle, San Francisco, and Los Angeles] than there ever has been, because of the tech industry.”
* Labor groups
Alaska Airlines (ASA)’s pilots (FC), represented by the Air Line Pilots Association (ALPA), and flight attendants (CA), represented by the Association of Flight Attendants (AFA), both issued statements in support of (ASA)’s acquisition of (VUS). The International Association of Machinists and Aerospace Workers (IAM), which represents (ASA)’s mechanics (MT) and other ground workers, took a more cautious approach, saying its “sole focus in the transaction is to make sure employees are not disadvantaged.”
(ASA) executives expressed confidence in executing the labor aspect of the merger. “Our union leaders are excited,” Minicucci said. “I think they’re going to work really hard to make this successful.”
* (DOJ) review
Getting approval for the merger from the (DOJ) will likely be the primary focus of (ASA) executives over the next several months. “We know the [DOJ] will take a close look at it,” (ASA) General Counsel, Kyle Levine said. “We think we have a good story to tell them. [There is] very little [route] overlap.” He called the merger “pro-competition and pro-consumer.”
Asked about skepticism in Washington DC over USA airline consolidation, Levine responded, “We’re planning for a slightly longer period [for the regulatory review]. We’ll follow the lead of the regulators and plan accordingly.”
An (ASA) - (VUS) merger would follow the mergers of Delta Air Lines (DAL) and Northwest Airlines (NWA), United Airlines (UAL) and Continental Airlines (CAL), Southwest Airlines (SWA) and AirTran Airways (CQT), and American Airlines (AAL) and US Airways (AMW/(USA) in the recent round of USA airline industry consolidation.
News Item A-3: "Five Factors Determining Whether Alaska keeps Virgin America’s A320s" by (ATW) Aaron Karp in AirKarp Blog, April 5, 2016.
If a computer program designed a Boeing (TBC) vs Airbus (EDS) test case, it likely couldn’t come up with a better scenario than the proposed Alaska Airlines (ASA) - Virgin America (VUS) merger. Both airlines (excepting Alaska regional affiliate, Horizon Air’s fleet) are all-narrow body airplane operators with North America) only networks and both have signed up for next-generation, re-engined narrow bodies.
These two airlines’ management teams, faced with very similar airplane needs, have made opposite choices: Seattle-based (ASA) operates all Boeing 737s, and San Francisco-based (VUS) operates all Airbus A320 family aircraft. (ASA) has 37 737 MAX airplanes on order and (VUS) has 40 A320neo family aircraft on order.
Virgin America (VUS), in fact, was the first airline in the world to make a firm commitment to the A320neo. Interestingly, after three other A320neo customers chose the Pratt & Whitney (PRW) geared turbofan engine to power their aircraft, (VUS) became the first to choose the (CFM) International (LEAP) engine to power its A320neos; a variation of the (LEAP) exclusively powers the 737 MAX (more on this later).
If the merger gains regulatory approval, the executives at (ASA), who will run the combined airline, will quickly be faced with fleet decisions following the planned January 1, 2017 closing of the transaction. Given that gaining access to (VUS)’s facilities and slots at San Francisco (SFO) and Los Angeles (LAX) International Airports was the primary attraction of acquiring (VUS) (not aircraft) will (ASA) executives move to dump (VUS)’s Airbus fleet? There is certainly a perception that this will happen. But Airbus (EDS) has a unique opportunity to convince a Boeing (TBC) believer that its offering is, if not better, at least just as good and worth keeping around.
Here are the five biggest factors that will determine whether any or all of (VUS)’s 60 A320 family aircraft (with three more still set to be delivered) will remain in a post-merger (ASA)’s fleet and/or whether (ASA) will take delivery of any or all of the 30 A320neos and 10 A321neos Virgin America has on order:
* How open-minded will (ASA) executives be? “One of the things that does happen when you do something like this, is we’ll get a chance to look under the covers of another company that has done some things very well,” (ASA) President & (CEO), Brad Tilden said on an April 4. He and other (ASA) executives repeatedly said during the call that while they don’t have much familiarity with Airbus (EDS) aircraft, they are looking forward to learning about (VUS)’s fleet. What will they learn? If they like what they see, could it dent their Boeing (TBC) bias?
* It is relatively easy, and pain free, for (ASA) to get out of the (VUS) fleet. Nearly all of (VUS)’s A320s are leased, not owned, and those leases start expiring in 2020. So (ASA) could just let the leases expire and walk away from the aircraft. (ASA) (CFO), Brandon Pederson said there is a “favorable cancellation provision” on (VUS)’s future A320neo order, indicating (ASA) wouldn’t have to pay a heavy penalty for not taking delivery of these aircraft. The 30 A320neos aren’t set to deliver until starting in 2020, so (ASA) would have a little time to think about this. However, one of the first decisions (ASA) would have to make post-merger, is whether to accept 10 A321neos Virgin America (VUS) has agreed to lease from (GE) Capital Aviation Services (GECAS) (GEF) with deliveries starting in the 2017 first quarter and set to be completed by the end of 2018. But since this is a lease deal (and (GECAS) probably wouldn’t have too hard of a time placing these aircraft elsewhere) canceling the A321neos likely wouldn’t be too costly for (ASA).
* Maintenance costs and fleet commonality. (ASA) is a strong, strong proponent of the advantages of operating a single fleet type, so the company’s executives will spend considerable time analyzing how much higher maintenance and other fleet-related costs will be, if it moved to a dual fleet. However, as mentioned above, there would be some maintenance commonality regarding A320neo and 737 MAX engines since (VUS) is going with the (LEAP-1A) to power its A320neos. (The 737 MAX is powered by the (LEAP-1B).)
* Without the (VUS) A320 family fleet, how would the “new” (ASA) maintain its growth? Tilden said the post-merger (ASA) would seek to maintain the same annual +4% to +8% growth rate as the pre-merger (ASA). This growth rate would not include the increase in size from combining the two airlines; in other words, the combined (ASA)/(VUS) would generally plan to get about +4% to +8% bigger per year compared to the combined size of the two airlines pre-merger. So if (ASA) drops the current A320 family aircraft and backs out of the future A320neo family deliveries, how will it grow as much as it plans? This is where Boeing (TBC) could swoop in and offer a sweet deal to (ASA) on additional 737NGs and 737 MAXs to (a) keep (ASA) as an “all-Boeing” operator and (b) deliver a serious blow to Airbus (EDS) ((VUS), which routinely wins plaudits for its service aboard its A320s, was a real Airbus success story, demonstrating exactly what could be done with an A320 cabin).
* That brings us to the final major factor: What kind of product does the “new” (ASA) plan to offer passengers? Tilden said he believes (ASA) and (VUS) have “more in common than not,” but acknowledged there are key differences in the two airlines’ products. (VUS) is known for mood-lit cabins, customized leather seats and cutting-edge seatback in-flight entertainment systems. (ASA)’s more utilitarian cabins offer “direct-to-your-device” (IFE) in which passengers download a Gogo Video Player onto their own portable device prior to takeoff. One of the big questions (ASA) will have to answer post-merger, is whether its onboard product is suited for the kind of high-end passengers traveling transcontinental on (VUS) from (SFO) and (LAX) to New York. Indeed, after beating out JetBlue Airways (JBL) in a bidding battle for (VUS), the last thing (ASA) wants to see happen is for (VUS)’s high-end transcontinental customers to switch to (JBL) or other airlines, because they are no longer getting the “Virgin” service on those 5-plus hour flights. Might it be simplest to keep at least some of (VUS)’s A320s (and the service they are designed to provide) for these transcontinental flights?
News Item A-4: "Why the (DOJ) Might Reject the Alaska - Virgin America Merger" by (ATW) Aaron Karp in AirKarp Blog, April 11, 2016.
The USA Department of Justice (DOJ) may be trapped in an airline consolidation paradox: It will be almost impossible for it not to approve a fifth merger of USA airlines in eight years, since it has already approved four others. But there are likely to be voices at the DOJ wanting to block the Alaska Airlines (ASA) - Virgin America (VUS) merger precisely because there have already been four other airline mergers in the USA since 2008.
Particularly because there is very little route overlap between (ASA) and (VUS), I can only think of one reason why the (DOJ) would object to the two airlines merging: A contingent at the (DOJ) has misgivings about the recent round of airline consolidation and may want to simply stop the consolidation train from going any further down the tracks.
Loretta Lynch was sworn in as Attorney General in April 2015, meaning she was not heading the (DOJ) when the department approved the prior four airline mergers: - (Delta (DAL) - Northwest (NWA), United (UAL) - Continental (CAL), Southwest (SWA) - AirTran (CQT), and American (AAL) - US Airways (AMW)/(USA)). Bill Baer, the head of the (DOJ)’s antitrust division and the most significant figure in reviewing the merger, didn’t ascend to his post until January 2013. The only airline merger approved since then, (AAL) - (AMW)/(USA) occurred only after the (DOJ) and (AAL) reached a settlement on the verge of a courtroom standoff. If Lynch and Baer want to send a signal that too much airline industry consolidation was approved by their predecessors, they may find a reason to disapprove of (ASA) - (VUS).
The late Jim Oberstar, the former Chairman of the House of Representatives Transportation & Infrastructure Committee, was perhaps the most vocal critic of the recent round of USA airline industry consolidation. He believed the (DOJ) should take into consideration “whether a merger will inevitably trigger others, ultimately reducing the industry to a few large carriers, each of which is unwilling to compete seriously in markets dominated by one of the others.”
Even if a given merger didn’t necessarily raise antitrust concerns on its own, Oberstar believed stopping a merger could be legitimate if that merger was viewed as a domino, that would inevitably lead to a string of future mergers. That’s how he felt about (DAL) - (NWA), (UAL) - (CAL) and (SWA) - (CQT), arguing in each case that approval by the (DOJ) would make it harder for the (DOJ) to reject the next merger and inevitably lead to a level of consolidation that would be bad for consumers.
“Airline consolidation brings consumers and communities fewer choices and less competition, usually leading to increased fares and reduced levels of service,” Oberstar argued. “That runs directly counter to the promise of [airline] deregulation.”
In the dispute between (UAL) and the (DOJ) over Newark International slots (recently dropped, because the (FAA) decided to “de-slot” Newark), Baer made it clear that he felt the (DOJ) had been duped by (UAL) and (CAL). While the airlines had agreed to divest slots to get their merger approved by the (DOJ) in 2010, the post-merger (UAL) systematically tried to reacquire those assets, Baer contended.
My guess is that Baer would prefer not to approve another airline merger. Especially if he can get Lynch on his side, here’s the case he would likely make (call it the “Oberstar argument”): While the (ASA) - (USA) merger doesn’t raise any overt competition concerns at specific airports, Baer may say it would create an airline industry that would be much too consolidated and would inevitably consolidate further, leading to less choice and higher fares for consumers. If this merger goes through, he could argue, then an ultra low-cost carrier merger proposal (some combination of Spirit (SPR), Frontier (FRO), and Allegiant (WJE)) will closely follow, and the (DOJ) will be poorly positioned to reject it. That would then leave the Big 4 ((DAL), (UAL), (SWA), and (AAL)), (ASA) - (VUS), a mega (ULCC) and essentially JetBlue Airways (JBL), meaning (JBL) would then seek a merger to survive, Baer could say. Even niche operators, Hawaiian Airlines (HWI) and Sun Country Airlines (SCA) might seek to get in on the consolidation game, he could argue.
Baer could say that either a line is drawn now, or the 12 mainline USA airlines still in service could soon become eight or seven or even fewer.
In my view, this would overstate the case. But that’s exactly the point. Since there is no specific reason to reject (ASA) - (VUS), the (DOJ)’s potential case against it wouldn’t hinge on divestments here or there. Instead, Baer and Lynch would likely make a sweeping case that airline industry consolidation has gone too far in the USA.
It would be unfair to (ASA) and (VUS) (they would, of course, have the recourse of federal court). But the (DOJ) might argue that it would be more unfair to American consumers to let consolidation keep moving forward. (ASA) executives should be prepared to face this argument from regulators.
May 2016: Virgin America (VUS) commenced services on the 4,105 km route between Los Angeles (LAX) and Honolulu (HNL) on May 5. Served by (VUS)'s fleet of A320s, the airport pair will face direct competition from Allegiant Air (WJE), American Airlines (AAL), Delta Air Lines (DAL), Hawaiian Airlines (HWI), and United Airlines (UAL), which combined, offer 107 weekly flights. Honolulu becomes (VUS)’s 13th route from Los Angeles, with a 14th launching on June 14 to Kahului, also in Hawaii. Honolulu is already served by Virgin America (VUS) from San Francisco.
October 2016: News Item A-1: Virgin America (VUS) reported a +$51.8 million net profit for the 2016 3rd quarter, down -27.9% from a +$71.9 million net profit in (3Q) 2015.
During the quarter, (VUS) reportedly incurred $1.6 million in legal and professional costs related to the merger agreement with the Seattle-based Alaska Air Group. (VUS)’s stockholders approved the merger July 26; the transaction is expected to be completed during the 4th quarter, though the Alaska Air Group remains in discussion with the USA Justice Department over gaining antitrust clearance for the acquisition of Virgin America (VUS).
(VUS)’s 3rd-quarter operating revenue was $858.7 million, up +7.6% year-over-year (YOY); total operating expenses for the quarter were $728.7 million, up +7.8%. Operating profit for the quarter was $129.9 million, up +6.7%.
(VUS)’s passenger traffic was up +21.4% (YOY) to 3.3 billion (RPM)s on 16.7% (YOY) capacity growth to 3.9 billion (ASM)s, producing a load factor of 85.9% LF, up +3.4 points (YOY). (VUS) carried 2.2 million passengers during the quarter, up +17.6% (YOY).
(VUS)’s 3rd-quarter operating margin was 20.4%, up +2.4 points (YOY). Yield declined -10.9% (YOY) to 11.92 cents, a result of the “reduced domestic industry fare environment,” (VUS) said. (PRASM) was down -7.3% (YOY) to 10.24 cents. (CASM) decreased -9.8% (YOY) to 9.17 cents, primarily a result of decreased fuel costs. Fuel expenses decreased -11.5% (YOY) to $76.6 million.
(VUS)’s fleet as of September 30 comprised 63 Airbus A320-family aircraft, compared to 55 aircraft a year ago. (VUS) serves 24 airports in the USA and Mexico.
News Item A-2: Virgin America (VUS) will launch daily nonstop New York (JFK) - Fort Lauderdale service from November 1, and New York (JFK) - Palm Springs services from November 19.
December 2016: News Item A-1: Seattle-based Alaska Air (ASA) Group has closed its $4 billion acquisition of San Francisco-based Virgin America (VUS), creating the 5th largest airline in the USA.
Alaska Air Group subsidiary, Alaska Airlines (AAL) and Virgin America (VUS) will seek to secure a single air operating certificate (AOC) from the (FAA) by early 2018. Regional subsidiary Horizon Air will retain its own (AOC).
(ASA) reached an agreement April 4 to buy Virgin America (VUS) for $2.6 billion and additionally take on $1.4 billion in debt and airplane lease obligations, creating a $4 billion enterprise value for the transaction. The merger gained antitrust clearance from the USA Department of Justice (DOJ) December 6 after (ASA) agreed to reduce its code sharing relationship with American Airlines (AAL).
By combining (ASA)’s strong presence in the USA Pacific Northwest with Virgin America (VUS)’s strong presence at major California airports, (ASA) believes the combined carrier can become the leading domestic services airline on the USA west coast. The combined company, which will be based in Seattle, will offer nearly 1,200 daily flights to 118 destinations, while generating >$7 billion in annual revenue. The combined fleet comprises 286 airplanes, including >150 mainline (ASA) Boeing 737 airplanes and >60 (VUS) Airbus A320 family aircraft.
“The combination expands service and provides more frequent connections to international airline partners in thriving technology markets in the [San Francisco] Bay Area, Los Angeles and Seattle,” (ASA) said. “Together, the airlines offer 289 daily flights to 52 destinations from California, including 113 daily nonstop flights to 32 destinations from 3 Bay Area airports and 105 daily nonstop flights to 37 destinations from 4 Los Angeles area airports.”
(ASA) added that the combination also grows its access to important east coast airports such as Washington National, New York (JFK), New York LaGuardia and New York Newark. The 1st signs of integration will become noticeable to the public on December 19, when Alaska (ASA) and Virgin America (VUS) passengers will be able to earn frequent flyer miles on the flights of either airline and (VUS) flight tickets will become available on (ASA)’s website.
(ASA) executives have not decided on the future of the Virgin America (VUS) brand. “(ASA) plans to continue to operate the (VUS) fleet with its current name and product for a period of time, while it conducts extensive customer research. (VUS) will continue to fly under its brand with no immediate changes to the on board product or experience.”
(ASA) (CEO) Brad Tilden added, “We appreciate that there is great interest in the future of the Virgin America (VUS) brand among customers and employees alike. This is a big decision and 1 that deserves months of thoughtful and thorough analysis. We plan to make a decision about the (VUS) brand early next year.”
(ASA), a longtime Boeing (TBC) customer, will also have to decide whether to operate a dual mainline fleet of 737s and A320s; (VUS) has ordered 40 A320neo family aircraft with deliveries scheduled to start next year.
(ASA) President & (COO) Ben Minicucci will take on the role of Virgin America (VUS) (CEO) effective immediately and lasting until Alaska Airlines (ASA) - Virgin America (VUS) gains a single (AOC). (VUS) (CFO) Peter Hunt will serve as President of Virgin America, reporting to Minicucci.
News Item A-2: Alaska Airlines (ASA) and Virgin America (VUS) moved to increase their combined presence at San Francisco International Airport (SFO) by announcing 3 new routes out of their (SFO) hub scheduled to start in summer 2017.
On June 14, (VUS) will launch daily service between San Francisco and Orlando International Airport (MCO), utilizing Airbus A320 aircraft.
From June 15 - July 17, (ASA) will operate a 2x-daily San Francisco - John Wayne Orange County Airport (SNA) service and a 6x-weekly service between the 2 airports, skipping Sundays. The route will be flown utilizing 76-seat Embraer E175 aircraft. Beginning July 18, a 4th daily flight on the (SFO) - (SNA) route will be added.
Combined, (ASA) and (VUS) will fly 71 daily intra-California flights to 12 airports throughout the state, (ASA) said. Also on July 18, (ASA) will launch a new 2x-daily (SFO) - Minneapolis St Paul International Airport (MSP) route, utilizing E175s.
News Item A-3: Elected leaders of Alaska Airlines (ASA) and Virgin America (VUS) pilots (FC), represented by the Air Line Pilots Association (ALPA), voted December 15 to accept a transition & process agreement (TPA) with (ASA) management to define the process for negotiating a joint collective bargaining agreement. Negotiations are scheduled to begin January 2017.
“Reaching an agreement on a process to negotiate a contract that brings the professional pilots (FC) of (VUS) and (ASA) together, under one contract, is an important first step toward creating 1 pilot (FC) group,” the (VUS) and (ASA) Master Executive Councils said.
The (TPA) agreement comes a week after the USA Department of Justice approved the Alaska Air Group’s acquisition of (VUS), clearing the path for the merger of the 2 companies, making it the 5th largest passenger airline in the USA
January 2017: Virgin America (VUS) in 2016 had 8.07 million passengers +14.7%, 19.59 million (RPK)s (2015: 16.79 million (RPK)s; +16.7%; 83.5% LF (2015: 82.2% LF).
April 2017: News Item A-1: The Alaska Air Group (the parent of Alaska Airlines (ASA), Virgin America (VUS) and Horizon Air) reported a 2017 1st-quarter net profit of +$99 million, down -46% from a net profit of +$184 million in the 2016 March quarter.
(ASA) noted the 2016 1st-quarter (GAAP) figure does not include San Francisco-based Virgin America (VUS), while the 2017 figure does ((ASA)’s acquisition of (VUS) closed in December 2016. Combining the 2 companies’ results from 2016 and excluding merger-related costs and fuel hedging adjustments in 2017, (Alaska-Virgin America) posted a pre-tax profit of +$202 million in the 2017 1st quarter versus $319 million in the 2016 March quarter, a -37% decrease.
On a combined basis, (Alaska-Virgin America)’s 1st-quarter revenue rose +2% year-over-year (YOY) to $1.7 billion while expenses jumped +14% to $1.6 billion (largely because of a +42%, or +$101 million, increase in fuel costs) and operating income was $166 million, down -48% from an operating profit of $322 million for the 2 companies in the 2016 March quarter.
Noting that the higher fuel costs mostly drove the (YOY) drop in earnings performance, (ASA) (CFO) Brandon Pedersen pointed out to analysts that (Alaska-Virgin America)’s (CASM) ex-fuel was flat in the 1rst quarter and is on pace to be flat for the full year. “Overall, our 1st full post-acquisition quarter was solid,” he said.
“The business is looking good,” (CEO) Brad Tilden said. “The integration is continuing to progress well.”
(Alaska-Virgin America)’s 1st quarter traffic, including regional flying, increased +4.7% (YOY) to 11.7 billion RPMs on a +4.9% rise in capacity to 14.4 billion ASMs, producing a load factor of 81.3% LF, down -0.2 point.
News Item A-2: The 1st Airbus A321neo, the largest and longest-range variant of the Airbus family of re-engined narrow body aircraft, has been delivered to Virgin America (VUS).
San Francisco-based (VUS), a subsidiary of Seattle-based Alaska Air Group, is leasing the A321neo from (GE) Capital Aviation Services (GECAS) (GEF). (VUS) took delivery of the aircraft, powered by (CFM) International (LEAP-1A) engines, at an April 20 ceremony in Hamburg.
Virgin America (VUS) President Peter Hunt said the A321neo “will allow us to further reduce our unit costs and enable us to further reduce our carbon emissions.” The A321neo joined (VUS)’s fleet of 53 A320ceos and 10 A319ceos. Configured with 184 seats, the A321neo is expected to enter service May 31 on (VUS)’s San Francisco - Washington National transcontinental route.
(VUS) was acquired by the Alaska Air Group in December 2016 and is in the process of being merged with Alaska Airlines (ASA). The Virgin America brand is slated to be retired in 2019.
(VUS) has 10 A321neos on order, all to be leased from (GECAS). (VUS) will take delivery of 5 A321neos this year, according to Alaska Air Group (CFO) Brandon Pedersen.
(VUS)’s A321neo arrived as (ASA), which operates an all-Boeing 737 mainline fleet, is undertaking a review to determine whether it will continue to operate (VUS)’s A320 family fleet long term alongside its 737 fleet.
Pedersen recently said that (ASA) is in talks with (GECAS) regarding the 5 A321neos (VUS) is expected to receive next year. “We’re working with the lessor on what the right answer is for those airplanes,” he said. “Our reluctance is to bring more Airbus airplanes in on a long-term lease arrangement before we make a long-term fleet decision.” “We’ll make a decision by the end of 2017” on whether to operate a dual mainline fleet long term, Alaska Air Group (CEO) Brad Tilden said, adding, “I think we’re the only airline in the world that has ‘proudly all-Boeing’ on the nose of every single [Alaska Airlines] airplane. My dad was a Boeing (TBC) guy, he was there for 32 years. We could not be more proud of our relationship with Boeing (TBC). Airbus (EDS) is a good manufacturer. A320s are good airplanes. What we need to do now is just take our time, cool our jets, spend some time and make the best decision for the long-term future of the company. To be really clear, it’s not Boeing (TBC) vs Airbus (EDS). That’s not the decision we’re going to make. The decision we’re going to make is whether we operate 1 fleet type or 2 fleet types.”
Regardless, Pedersen said (ASA), which has 37 737 MAX airplanes on order, will likely operate most of (VUS)’s A320 family fleet until 2023 - 2024, when most of the leases on (VUS)’s aircraft expire (though the aircraft will be retrofitted with a standard Alaska Airlines (ASA) interior by mid-2019. The fate of a Virgin America (VUS) order on the books for 30 A320neos to be delivered from 2020 to 2022 “is entirely dependent on what we decide this year” regarding the long-term fleet, Pedersen said.
If those 30 A320neos are canceled, (ASA) would likely add more 737 MAXs to its order book. “To the extent that we decide to go a different route on those 30 Airbuses, we’ll have to flex the Boeing (TBC) order,” Pedersen said.
May 2017: A321-253neo (7639, N922VA), ex-(D-AVYE) (GECAS) (GEF) leased.
September 2017: Alaska Airlines (ASA) and Virgin America (VUS) launched daily San Francisco to New Orleans Airbus A320 service.
October 2017: News Item A-1: Alaska Air Group executives acknowledged the company’s network expansion this year (44 new routes, including 32 in California alone) has been met with intense pricing competition, which, combined with pilot (FC) shortages at regional carrier Horizon Air, have impacted the 2017 3rd-quarter results. With its financial results now incorporating Virgin America (VUS), which formally merged with Alaska Air (ASA) in December 2016, the Alaska Air Group’s net profit for the quarter totaled $266 million.
November 2017: Alaska Airlines (ASA) and Virgin America (VUS) 2,700 pilots (FC) began working under a new, joint labor contract on November 1, following a binding arbitration ruling that settled pay and benefits issues. The contract with Seattle-based Alaska Air Group, which is in the process of merging (ASA) and (VUS), lasts until April 1, 2020. The Alaska Air (ASA) Group acquired San Francisco-based Virgin America (VUS) for $2.6 billion in cash and $1.4 billion in assumed debt in late 2016.
Click below for photos:
VUS-A319 - 2012-09
VUS-A319-112 - 2013-10
VUS-A320 - 2013-08
VUS-A320neo - 2012-11
8 A319-112 (CFM56-5B) (3181, N523VA, 2007-07; 3204, N524VA, 2007-08; 3324, N525VA, 2007-12; 3347, N526VA, 2008-01; 3417, N527VA, 2008-03; 3445, N528VA, 2008-03; 3684, N529VA, 2008-11; 3686, N530VA, 2008-11). 8F, 114Y.
2 +4 ORDERS A319-132 (CFM56-5B) (2773, N521VA, 2006-05; 2811, N522VA, 2006-06 N537VA), (GEF) LSD. 2773; & 2811; LST (SKS) 2007-02. 8F, 114Y.
9 +9 ORDERS A320-214 (CFM56-5B) (2616, N621VA, 2006-02; 2674, N622VA, 2006-03; 2740, N623VA, 2006-12; 2778, N624VA, 2006-05; 2800, N625VA, 2006-06 (SEE PHOTO) - N638VA; 2830, N626VA, 2006-07; 2851, N627VA, 2006-08; 3398, N635VA, 2008-02; 3503, N638VA, 2008-05; 4448, N835VA, 2010-09), (GEF) LSD. 2740 LST (TPR) 2006-12. 2740 RF (TPR) 2008-12. 8F, 141Y.
11 A320-214 (CFM56-5B) (2347; 2451; 2993, N628VA, 2007-01; 3037, N629VA, 2007-03; 3101, N630VA, 2007-04; 3230, N633VA, 2007-09; 3359, N634VA, 2008-01; 3460, N636VA, 2008-04; 3465, N637VA, 2008-04; 3656, N641VA, 2010-06; 4480, N836VA' 4814, N843VA "VAMANOS;" 5058, N854VA "STAND UP FLYER" 2012-07), 3037 LST (TPR) AS (PR-MHL) 2007-05. 3037; RF (TPR) 2008-12. 8F, 141Y.
1 A320-214 (CFM56-5B) (4991, N849VA, 2012-01), (AWW) LSD. EX-(F-WWBB). 8F, 141Y.
1 A320-214 (CFM56-5B) (3135, N631VA), (BBB) LSD 2007-05. 8F, 141Y.
1 A320-214 (CFM56-5B) (4999, N851VA, 2012-01; 5004, N852VA, 2012-02), (GCP) LSD. EX-(F-WWBR; & F-WWDL). 8F, 141Y.
1 A320-214 (CFM56-5B) (3152, N632VA), (PSS) LSD 2007-06. 8F, 141Y.
3 A320-214 (CFM56-5B) (3016, N639VA, 2010-08; 3349, N640VA, 2010-07; 3670, N642VA, 2010-07), EX-(9K-CAE; 9K-CAG & 9K-CAH), (JZI) LSD. 8F, 141Y.
2 A320-214 (CFM56-5B) (5034, N853VA; 6835, N284VA), WELLS FARGO BANK NW OWNED 2015-12.
/70 OPTIONS A319/A320 (CFM56-5B):
90 ORDERS (2013-02) A320 (INCL 30 A320NEOS (LEAP-X) STARTING DELIVERIES IN 2020), 146 - 149 PAX:
1 +29 ORDERS A321neo (LEAP-1A) (7639, N922VA, 2017-05), ex-(D-AVYE), (GE) CAPITAL AVIATION SERVICES (GECAS) (GEF). 184 PAX.
1 +9 ORDERS A321neo (LEAP-1A), 1ST DELIVERY (2017-04) GE CAPITAL AVIATION SERVICES (GECAS) (GEF), 184 PAX.
Click below for photos:
VUS-DAVID CUSH - 2011-12-A
VUS-DAVID CUSH - 2011-12-B
VUS-FRED REID - 2004-07
DONALD CARTY, CHAIRMAN, EX-(AAL), (2006-02).
SAMUEL SKINNER, VICE CHAIRMAN, EX-USA SECRETARY & WHITE HOUSE CHIEF OF STAFF (2007-01).
BEN MINICUCCI, CHIEF EXECUTIVE OFFICER (CEO) VIRGIN AMERICA (2016-12).
Ben is also the current Alaska Airlines (ASA) President & (COO).
DAVID CUSH, PRESIDENT & CHIEF EXECUTIVE OFFICER (CEO), EX-(AAL) (2007-12), RESIGNED WITH TAKEOVER BY ALASKA AIRLINES (ASA) (2016-12).
David's extensive industry experience, business acumen and creativity were the perfect attributes for leading Virgin USA (VUS) as it continued to grow from a promising startup to a major carrier," (VUS) Chairman, Donald Carty said. "Both Fred Reid and I worked with David during our careers, and we were confident he was the right person to lead Virgin America (VUS)." Cush also served as VP & General Sales Manager, VP of (AAL)'s St Louis hub, and was VP International Planning & Alliances during his 20 combined years at (AAL). He left (AAL) in 1996 to become (COO) at Aerolineas Argentinas (ARG), but returned to (AAL) 2 years later.
PETER HUNT, PRESIDENT VIRGIN AMERICA (VUS) (2016-12).
Peter was VP & Chief Financial Officer (CFO) of (VUS), ex-Pinnacle Airlines from (2011-06).
STEVE FORTE, CHIEF OPERATING OFFICER (COO), EX-(UAL) (2013-04).
BILL MAGUIRE, CHIEF INFORMATION OFFICER (CIO).
As Chief Information Officer (CIO), Bill Maguire leads the development of a highly-efficient, flexible technology platform as the foundation of Virgin America (VUS)'s low-cost, high-value business strategy. Maguire joined Virgin America (VUS) from Aspect Communications in San Jose, California, where he had been (CIO) and Senior VP since 2004. As the executive responsible for worldwide corporate infrastructure, he managed a worldwide staff of 92 employees and contractors. Maguire quickly assessed Aspect's Information Technology (IT) organization and made recommendations for a complete redesign of their infrastructure, from the network to the application layers, while reducing his budget by $4 million annually. He was also responsible for the operation of the company's Research & Development (R&D) laboratory. Prior to Aspect, Maguire was (CIO) for Legato Systems, Inc in Mountain View, California, where he was responsible for all corporate capital programs and worldwide corporate infrastructure between 2001 and 2003. During his tenure, Maguire's team successfully leveraged technology advances such as (VOIP) to reduce >$3 million in cost. From 2000 to 2001, Maguire held a variety of executive positions with Amdahl in Sunnyvale, California, including VP of Emerging Business Operations, VP of Business Development and Strategies, and as Interim (CEO) of Trusted Answer, the company's web-based help desk start-up venture. Maguire's innovative career was shaped during his 23 years with the United States Postal Service (USPS). He joined the company in Field Operations in the Washington, DC area and worked his way through the ranks to manage one of the agency's largest computer operations data centers in North America. Maguire earned his Bachelors of Science in criminal justice from the University of Southern Mississippi. He currently resides in Santa Cruz, California.
MARK BIANCHI, SENIOR VP TECHNICAL OPERATIONS (2011-03).
BOB WEATHERLY, SENIOR VP FLIGHT OPERATIONS, EX-(TLS)/(CDI) (firstname.lastname@example.org).
Bob Weatherly provides direction and control to ensure that Virgin America (VUS) achieves the highest levels of safety, reliability, operational efficiency, productivity and customer service. Bob served as the liaison to the (FAA) to ensure compliance with aeronautical and safety regulations, working closely with regulatory entities and trade associations. Bob has an extensive background in aviation operations management. Having logged >17,000 hours on large transport airplanes, Bob is Type Rated on DC-6, 737, 727, DC-8, DC-10, 747-400 and the A320 & A319 airplanes. Previous management positions include VP of Flight Operations at Atlas Air (TLS), where in-flight incidences were reduced by >80% during his tenure. Bob served as VP of Flight Operations for Canadian Pacific Airlines (CDI) for 4 years and Canadian Airlines (CDI) for 8 years, prior to joining Atlas (TLS). During that time, Canadian Airlines (CDI) was recognized by the International Air Transport Association (IATA) for flying the most accident-free hours over a 10-year period of any of its 600 members. Bob previously served as VP Operations at Eastern Provincial Airlines. During his time there, the on-time performance of the airline improved from 35 to 85% over a one-year period. Prior to 1984, Bob held the following titles as Director of Safety, Director of Standards, Director of Training, Director of Operations, Chief Pilot, and Assistant Chief Pilot with Canadian Pacific Airlines (CDI). Bob was a member of several professional associations, most notably the Flight Safety Foundation, where for 5 years he was a member of the Board of Governors and Chairman of the Foundation's International Advisory Committee. He was a member of the Vancouver Board of Trade and a member of (IATA)'S Operations Committee where he served as Chairman of the (IATA) Operations Committee for 2 years.
JOHN MCLEOD, SENIOR VP PLANNING & SALES, EX-(WJI) (2012-07).
BRAD THOMANN, VP FLIGHT OPERATIONS, EX-(VOZ)/(TBC)/(UAL) (2014-08).
Brad is a 30-year industry veteran, who has held a number of senior leadership positions at Virgin Australia (VOZ), Boeing (TBC), and United Airlines (UAL).
JOE HOUGHTON, VP/CHIEF PILOT.
Joe Houghton, as Chief Pilot, is the Flight Operations liaison to government regulatory agencies and industry trade associations for Virgin America (VUS). As a highly effective and energetic leader with 20 years of management and operations experience, Joe will exercise administrative and supervisory control over all pilots (FC), maintain flying proficiency, and will oversee the safe and efficient operation of all (VUS) airplanes. Joe also will oversee the issuance of operational notices and will establish and implement operations specifications. Joe managed marketing, sales, operations and personnel as founder and President of Locked On, an event planning and consultation firm that directs Fortune 500 clients toward flawless execution. Concurrent with this venture, Joe participated in Afterburner Seminars, which provided targeted management and leadership training for Fortune 500 companies. Prior to Joe's business venture, he was the Assistant Chief Pilot for US Airways (USA) and managed 725 pilots, including mainline and MetroJet operations. Joe logged >11,000 hours of flight time in 18 years with the company. Concurrently, Joe served 21 years with the Maryland Air National Guard as an A-10 Squadron Commander, serving as Training Officer, Chief of Weapons, Chief of Operational Plans, Operations Officer & Flight Commander and Supervisor of Flying. From 1982 to 2003, Joe experienced 2 operational tours in Bosnia and 1 in the Southern No-Fly Zone of Iraq. Joe graduated from Embry-Riddle Aeronautical University with a BS degree in Aeronautical Science and Associate degrees in Aviation Management and Aeronautical Studies.
JIM DAVIS, VP AIRPORTS & GUEST SERVICES, EX-(HWI)/(NWA)/(DAL) (2012-05).
MS LUANNE CALVERT, VP MARKETING (2011-10).
SPENCE KRAMER, VP COMMUNICATIONS.
In the role of VP Communications, Spence spearheads all communications activities for Virgin America (VUS). Prior to joining Virgin America (VUS), Spence was VP Advertising & Promotion at (ESPN). There, he oversaw the strategy, creative development, production and marketing materials - including tv and radio spots, print and outdoor, collateral, etc - for (ESPN)'s numerous programs, networks and properties. At (ESPN), Spence oversaw 30 marketing professionals in managing (ESPN)'s relationships with its core advertizing agencies (Wieden+Kennedy/NY, Ground Zero and Concept Farm), its a la carte creative partners, as well as its internal creative services department. Having started as an Account Coordinator at the Grey Advertising subsidiary, Grey Entertainment & Media/NY, Kramer's career spanned 16 years in a variety of disciplines. While those have included 2 stints in the not-for-profit world and 1 year of private school teaching, his primary area of focus has been (and continues to be) leisure advertising and marketing. Spence is a 1988 graduate of Duke University. He lives in New York with his wife, Jennifer, and their dog, Pork Chop.
MS FRANCES FIORILLO, VP PEOPLE & IN-FLIGHT SERVICES.
Frances Fiorillo leads all aspects of Virgin America (VUS)'s organizational development, human resources (HR) strategy and planning, compensation and benefits programs, recruiting, learning and performance management and all aspects of the development and day-to-day guest aspects of in-flight services. Frances joined Virgin America (VUS) from the Provincial Health Services Authority in British Columbia where she was Chief Human Resources (HR) Officer, responsible for human resources (HR), organizational cultural change, labor relations, employee wellness, learning and development. Prior to her Provincial Health Services Authority assignment, Frances spent >28 years in the airline industry and clearly brings a wealth of airline experience to the Virgin America (VUS) management team. Frances started her career in 1974 as a Flight Attendant (CA) with Canadian Pacific Airlines (CDI). After gaining experience as a Supervisor, she moved on to (CDI) in 1986 as Manager, Standards & Procedures, and then Manager, Flight Attendant Administration. From there, she quickly ascended through the management ranks to become Director, Onboard Services in 1989, and VP In-flight Service in 1993. Her career with (CDI) (VP) culminated as VP Human Resources (HR), a position she held from 1997 to 2000. In 2000, Frances joined the start up team for (ZIP), Air Canada (ACN)'s low-fare airline, as Senior VP Human Resources (HR) & Customer Service, where she participated in the planning of commercial, operational, technological, service and brand strategies, and implementation plans relating to the new airline's launch. Originally from Vancouver, Frances graduated with a Bachelor’s Degree in Psychology from the University of British Columbia.
MS DIANA WALKE, VP PLANNING & SALES.
KEN SCARINCE, VP/CONTROLLER.
Ken Scarince oversees all day-to-day accounting and financial reporting functions for Virgin America (VUS). Previously, Ken was VP of Finance for Chicago Express, a company he joined in 2000 as Director of Finance. Prior to Chicago Express, Ken soared through the finance ranks at Skyway Airlines, ascending from Accounting Manager to Director of Finance within 3 years. In 1995, Ken was hired by Deloitte & Touche in Milwaukee as a Staff Auditor. A year later, he passed the Certified Public Accountant (CPA) exam and was awarded the (CPA) Certificate in 1999 after 3 years of practice, consistent to Wisconsin law, and in 1997, he was promoted to Senior Auditor. Ken attended Marquette University in Milwaukee, Wisconsin, where he earned a Bachelor of Business Administration degree in Finance in 1992. He continued his education at the University of Wisconsin, graduating with a Master's degree in Accounting in 1995. Ken was born in New York and raised in Saint Cloud, Minnesota. He currently resides in Chicago.
ROSS BONANNO, VP AIRPORTS & GUEST CARE, EX-(AMW)/(USA) (2009-09).
MS ABBY LUNARDINI, VP BRAND MARKETING.
FRANCIS FARROW, GENERAL MANAGER.
KEN BIELER, DIRECTOR ENGINEERING, PRODUCT DESIGN & INNOVATION.
MS BETH MEDLEN, DIRECTOR BASE MAINTENANCE.
CHARLES OGILVIE, DIRECTOR IN-FLIGHT ENTERTAINMENT (IFE) & PARTNERSHIPS.
MS STACY GEAGAN, DIRECTOR COMMUNICATIONS, EX-(DAL).
ADAM GREEN, DIRECTOR NETWORK PLANNING.