Delaware | 001-36718 | 20-1585173 |
(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification Number) |
555 Airport Boulevard Burlingame, CA 94010 (Address of principal executive offices, including Zip Code) |
Registrant’s telephone number, including area code: (650) 762-7000 |
Exhibit No. | Description |
99.1 | Press Release issued by Virgin America Inc. dated April 28, 2016 |
Date: April 28, 2016 | By: /s/ Peter D. Hunt |
Peter D. Hunt | |
Chief Financial Officer |
Exhibit No. | Description |
99.1 | Press Release issued by Virgin America Inc. dated April 28, 2016 |
• | First quarter 2016 net income excluding special items1 was $18.4 million, an increase of 74.5 percent from the first quarter of 2015. Operating income and operating margin excluding special items were $33.2 million and 9.1 percent, improving 152.8 percent and 5.1 points, respectively. |
• | On a GAAP basis, net income was $17.5 million. Operating income and operating margin on a GAAP basis were $31.9 million and 8.8 percent, respectively. |
• | Fully diluted earnings per share excluding special items was $0.41. On a GAAP basis, fully diluted earnings per share was $0.39. |
• | On April 1, 2016, subsequent to quarter end, Virgin America entered into a merger agreement with Alaska Air Group, Inc. |
• | Capacity: Available seat miles (ASMs) for the first quarter of 2016 increased 15.8 percent year-over-year compared with the first quarter of 2015. Virgin America took delivery of two new Airbus A320 aircraft in the first quarter of 2016, ending the quarter with 60 total Airbus A320-family aircraft of which 58 were in service, compared to 53 aircraft in service at the end of the first quarter of 2015. |
• | Operating Revenue: Total operating revenue was $364.0 million, an increase of 11.5 percent over the first quarter of 2015. |
• | Revenue per Available Seat Mile (RASM): Passenger revenue per available seat mile (PRASM) decreased 3.8 percent compared to the first quarter of 2015, to 9.88 cents, driven by a 3.7 percent decrease in yield. Total RASM decreased 3.7 percent year-over-year. |
• | Cost per Available Seat Mile (CASM): Total CASM excluding special items decreased 8.8 percent compared to the first quarter of 2015, to 10.13 cents. A decrease in fuel costs was the primary factor in the decline in CASM. Salaries, wages and benefits costs included a $3.4 million accrual for teammate profit sharing and related payroll taxes. CASM excluding special items, fuel costs and profit sharing for the quarter increased 1.8 percent year-over-year, to 7.96 cents. Total CASM on a GAAP basis decreased 7.8 percent compared to the first quarter of 2015, to 10.17 cents. |
• | Fuel Expense: Virgin America realized an average economic fuel cost per gallon including taxes and the impact of hedges of $1.57, which was 35.9 percent lower year-over-year. |
• | Special Items: Special items in the first quarter of 2016 consist of $1.6 million of costs related to the merger agreement with Alaska Air Group, Inc., signed on April 1, 2016 and an aggregate of $0.4 million of out-of-period fuel related adjustments. |
• | Operating Income: First quarter 2016 operating income excluding special items was $33.2 million, an increase of 152.8% compared to the first quarter of 2015. The Company’s operating margin excluding special items of 9.1 percent improved by 5.1 points year-over-year. |
• | Income before Taxes: Pre-tax income excluding special items was $29.4 million during the first quarter of 2016, an increase of 170.8% versus the first quarter of 2015. |
• | Net Income: Net income excluding special items for the first quarter increased by 74.5 percent year-over-year to $18.4 million. The Company recorded a provision for income taxes excluding special items of $10.3 million in the first quarter of |
• | Fully Diluted Earnings per Share (EPS): Fully diluted earnings per share excluding special items was $0.41 for the first quarter of 2016. First quarter 2016 fully diluted earnings per share was $0.39 on a GAAP basis. |
• | Liquidity: Unrestricted cash was $562.8 million as of March 31, 2016. Virgin America generated $95.3 million of operating cash flow during the quarter. |
• | Rated the number one carrier in the 2016 Airline Quality Report, an annual analysis of airline performance metrics like on-time performance and baggage handling, conducted by Wichita State University and Embry-Riddle Aeronautical University. This is the fourth consecutive year Virgin America has achieved the number one rating in this report. |
• | Began its new three-time daily service from San Francisco International Airport (SFO) to Denver International Airport (DEN), the number one requested destination by its high-tech corporate accounts. Virgin America is the only airline on the route to offer three classes of service, WiFi, power outlets, on-demand food ordering and touch-screen seatback entertainment on every flight. To support its growth in the region, Virgin America also opened a new Customer Contact Center in Denver. |
• | Announced its plans to expand its new Hawai’i services with daily nonstop flights from Los Angeles International Airport (LAX) to Honolulu, Oahu starting on May 5, 2016, and Kahului, Maui starting on June 14, 2016. The airline also announced the expansion of its seasonal service from San Francisco International Airport (SFO) to Palm Springs International Airport (PSP) to a year-round flight schedule. |
• | Launched a new loyalty partnership with Starwood Preferred Guest® (SPG®), the award-winning loyalty program of Starwood Hotels & Resorts Worldwide Inc. The partnership allows SPG members to transfer Starpoints into Elevate points while Elevate members can earn points for Starwood hotel stays. During the quarter, Virgin America grew its frequent flyer base to approximately 4.1 million Elevate members. |
• | Introduced a suite of new products to its website, allowing guests to customize their travel while increasing ancillary revenue opportunities for the airline. |
• | Continued to roll out its new state-of-the-art Red® in-flight entertainment system across its fleet, which features higher resolution capacitive touch screens and Android-based software that allows for three times more content - along with the first surround-sound listening experience to be offered by an airline. |
• | Took delivery of two new Airbus A320 aircraft in the first quarter of 2016, with an additional three scheduled to be delivered in the second quarter of 2016. |
When: | April 28, 2016, 9:00 AM Pacific Time / 12:00 PM Eastern Time |
Who: | President and Chief Executive Officer, David Cush |
Senior Vice President and Chief Financial Officer, Peter Hunt | |
Senior Vice President - Planning and Sales, John Macleod | |
Web address: | The webcast will be available at: http://ir.virginamerica.com |
Replay: | A replay will be available within 24 hours of the webcast and will be archived on the Company's website for a period of time. |
Virgin America Inc. Consolidated Statements of Operations (in thousands, except per share data) | |||||||||||
Three months ended March 31, | |||||||||||
2016 | 2015 | % Change | |||||||||
Operating Revenues: | |||||||||||
Passenger revenue | $ | 322,631 | $ | 289,364 | 11.5 | ||||||
Other revenue | 41,378 | 36,987 | 11.9 | ||||||||
Total operating revenue | 364,009 | 326,351 | 11.5 | ||||||||
Operating Expenses: | |||||||||||
Salaries, wages and benefits | 78,868 | 64,733 | 21.8 | ||||||||
Aircraft fuel | 67,277 | 88,558 | (24.0 | ) | |||||||
Aircraft rent | 47,320 | 44,982 | 5.2 | ||||||||
Landing fees and other rent | 39,132 | 33,983 | 15.2 | ||||||||
Sales and marketing | 32,388 | 26,379 | 22.8 | ||||||||
Aircraft maintenance | 16,834 | 13,834 | 21.7 | ||||||||
Depreciation and amortization | 7,806 | 4,103 | 90.3 | ||||||||
Other operating expenses | 40,809 | 34,396 | 18.6 | ||||||||
Merger-related costs | 1,647 | — | NM | ||||||||
Total operating expenses | 332,081 | 310,968 | 6.8 | ||||||||
Operating income | $ | 31,928 | $ | 15,383 | 107.6 | ||||||
Operating margin | 8.8 | % | 4.7 | % | 4.1 | pts | |||||
Other expense | (3,794 | ) | (2,273 | ) | 66.9 | ||||||
Income before taxes | 28,134 | 13,110 | 114.6 | ||||||||
Income tax expense (benefit) | 10,680 | 324 | NM | ||||||||
Net income | $ | 17,454 | $ | 12,786 | 36.5 | ||||||
Net income per share: | |||||||||||
Basic | $ | 0.39 | $ | 0.30 | |||||||
Diluted | $ | 0.39 | $ | 0.29 | |||||||
Shares used for computation: | |||||||||||
Basic | 44,230 | 43,184 | |||||||||
Diluted | 44,618 | 44,618 |
KEY OPERATING STATISTICS | |||||||||||
Three months ended March 31, | |||||||||||
2016 | 2015 | % Change | |||||||||
Available seat miles - ASMs (millions) | 3,265 | 2,819 | 15.8 | ||||||||
Departures | 16,016 | 13,828 | 15.8 | ||||||||
Average stage length (statute miles) | 1,423 | 1,425 | (0.1 | ) | |||||||
Aircraft in service (end of period) (1) | 58 | 53 | 9.4 | ||||||||
Fleet utilization (block hours per day) | 10.4 | 10.1 | 3.0 | ||||||||
Passengers (thousands) | 1,766 | 1,523 | 16.0 | ||||||||
Average fare | $ | 182.70 | $ | 190.03 | (3.9 | ) | |||||
Yield per passenger mile (cents) | 12.34 | 12.82 | (3.7 | ) | |||||||
Revenue passenger miles - RPMs (millions) | 2,615 | 2,257 | 15.9 | ||||||||
Load factor | 80.1 | % | 80.1 | % | — | pts | |||||
Passenger revenue per available seat mile - PRASM (cents) | 9.88 | 10.27 | (3.8 | ) | |||||||
Total revenue per available seat mile - RASM (cents) | 11.15 | 11.58 | (3.7 | ) | |||||||
Cost per available seat mile - CASM (cents) | 10.17 | 11.03 | (7.8 | ) | |||||||
CASM excluding special items (cents) | 10.13 | 11.11 | (8.8 | ) | |||||||
CASM excluding special items, fuel costs and profit sharing (cents) | 7.96 | 7.82 | 1.8 | ||||||||
Fuel cost per gallon | $ | 1.56 | $ | 2.39 | (34.7 | ) | |||||
Fuel cost per gallon excluding special items | $ | 1.57 | $ | 2.45 | (35.9 | ) | |||||
Fuel gallons consumed (thousands) | 43,072 | 37,026 | 16.3 | ||||||||
Teammates (FTEs) | 2,715 | 2,429 | 11.8 |
Non-GAAP Statement of Operations and Net Income Excluding Special Items (in thousands except percentages): | ||||||||||
Three months ended March 31, | ||||||||||
2016 | 2015 | % Change | ||||||||
Operating income, as reported | $ | 31,928 | $ | 15,383 | ||||||
Add: merger-related costs (1) | 1,647 | — | ||||||||
Add (deduct): out-of-period fuel costs (2) | (410 | ) | (2,263 | ) | ||||||
Operating income, non-GAAP | $ | 33,165 | $ | 13,120 | 152.8 | |||||
Operating margin, as reported | 8.8 | % | 4.7 | % | ||||||
Add: merger-related costs (1) | 0.4 | — | ||||||||
Add (deduct): out-of-period fuel costs (2) | (0.1 | ) | (0.7 | ) | ||||||
Operating margin, non-GAAP | 9.1 | % | 4.0 | % | 5.1 | |||||
Income before taxes, as reported | $ | 28,134 | $ | 13,110 | ||||||
Add: merger-related costs (1) | 1,647 | — | ||||||||
Add (deduct): out-of-period fuel costs (2) | (410 | ) | (2,263 | ) | ||||||
Income before taxes, non-GAAP | $ | 29,371 | $ | 10,847 | 170.8 | |||||
Net income, as reported | $ | 17,454 | $ | 12,786 | ||||||
Add: merger-related costs (1) | 1,647 | — | ||||||||
Add (deduct): out-of-period fuel costs (2) | (410 | ) | (2,263 | ) | ||||||
Add (deduct): income tax effect of special items (3) | (333 | ) | $ | — | ||||||
Net income, non-GAAP | $ | 18,358 | $ | 10,523 | 74.5 | |||||
Fully diluted earnings per share, as reported | $ | 0.39 | $ | 0.29 | ||||||
Add: merger-related costs (1) | 0.04 | — | ||||||||
Add (deduct): out-of-period fuel costs (2) | (0.01 | ) | (0.05 | ) | ||||||
Add (deduct): income tax effect of special items (3) | (0.01 | ) | $ | — | ||||||
Fully diluted earnings per share, non-GAAP | $ | 0.41 | $ | 0.24 | 70.8 |
(1) | Costs related to the plan of merger with Alaska Air Group, Inc. |
(2) | Certain adjustments for fuel hedging costs and fuel usage taxes that do not apply to fuel consumed during the respective quarters. |
(3) | Three months ended March 31, 2016 include the statutory tax effect of special items. For the three months ended March 31, 2015 tax effect on special items was marginal and excluded. |
CASM, excluding Special Items and excluding Fuel and Profit Sharing (in cents): | ||||||||
Three months ended March 31, | ||||||||
2016 | 2015 | % Change | ||||||
CASM, as reported | 10.17 | 11.03 | (7.8 | ) | ||||
Deduct: merger-related costs (1) | (0.05 | ) | — | |||||
Add: out-of-period fuel costs (2) | 0.01 | 0.08 | ||||||
CASM, non-GAAP, excluding special items | 10.13 | 11.11 | (8.8 | ) | ||||
Deduct: aircraft fuel | (2.06 | ) | (3.22 | ) | ||||
Deduct: profit sharing | (0.11 | ) | (0.07 | ) | ||||
CASM, non-GAAP, excluding special items, aircraft fuel and profit sharing | 7.96 | 7.82 | 1.8 |
(1) | Costs related to the plan of merger with Alaska Air Group, Inc. |
(2) | Certain adjustments for fuel hedging costs and fuel usage taxes that do not apply to fuel consumed during the respective quarters. |
Non-GAAP Fuel Price Per Gallon excluding Special Items | ||||||||||
Three months ended March 31, | ||||||||||
2016 | 2015 | % Change | ||||||||
GAAP fuel cost per gallon | $ | 1.56 | $ | 2.39 | ||||||
Add: out-of-period fuel adjustments (1) | 0.01 | 0.06 | ||||||||
Non-GAAP fuel cost per gallon excluding special item | $ | 1.57 | $ | 2.45 | (35.9 | ) |
(1) | Certain adjustments for fuel hedging costs and fuel usage taxes that do not apply to fuel consumed during the respective quarters. |