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Virgin America Shows Worse Q4 Numbers Excluding Lower Fuel Prices

DOT data for the fourth quarter of 2008 was released this week, and as usual, I dove right in to see how Virgin America did. The answer? They did not do very well. Lower fuel prices helped mask the loss, but without that benefit, it was a worse quarter than Q3.

  • The airline's net loss shrunk from $59.1 million to $36.9 million. Net margin shrunk from -52% to -34%, but this improvement was based on lower fuel prices.
  • Total fuel cost for scheduled service dropped from $61.1 million in Q3 to $30.9 million in Q4. Average cost per gallon dropped from $3.52 to $1.95. Had they paid Q3 fuel prices in Q4, total fuel cost would have risen by $24.8 million.
  • Adding that $24.8 million additional fuel cost would have likely resulted in a slightly higher loss in Q4 than Q3.
  • After rapid revenue growth during all previous quarters, Q4 actually was the first to see a revenue decrease. Revenue dropped from $114.1 million to $109.7 million.
  • Cash did spike in Q4 as expected due to an infusion. At the end of Q3, cash was at $25.4 million and at the end of Q4, it was at $67.5 million.
  • This cash increase came via Long Term Debt (LTD). LTD has tripled since the end of Q1 and doubled since the end of Q2. Just in Q4, LTD ballooned from $232.2 million to $359.5 million.
As you can see, these results were not good, and it doesn't bode well for the future. CEO David Cush kept focusing on the quarter-over-quarter improvement during past discussions, but this one clearly didn't show that same growth.

Tomorrow, I'll look into 2009 to get some early reads on their performance this year.

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