Virgin America's Improved Second Quarter Performance Details

Last Updated Sep 25, 2009 11:26 AM EDT

At the end of August, Virgin America released a preview of its second quarter numbers and they didn't look too bad. But now the full data has been released through the government so we can pick out nuggets of information.

Let's start with the balance sheet. Things are relatively stable on the asset side of the house, but cash is down just shy of $28 million. That's a $10 million drop since Q1. The liability side of the house is heating up, however. Current liabilities spiked 30 percent over Q1 primarily on their very first maturation of long term debt and an increase in air traffic liability. But long term debt is the one that should be most concerning going forward. Only $20 million entered the current liability world this quarter, but there is still $375 million sitting in long term debt, a drop of only $12 million from Q1. I'm guessing we're going to see that current liability number creep up further.

The income statement looks much better with revenues rising 35 percent from Q1. Even more important is that operating expense rose only 11 percent. Maintenance is still hovering around the $10 million mark - that is bound to rise as airplanes age. But this gave them a -8 percent operating margin and just over a -11 percent net margin. Those aren't good numbers in the scheme of things (they still lost money), but they're much, much better.

Fuel prices still remain incredibly low. After paying $3.52 a gallon in Q3 of last year, it plunged to $1.95 in Q4 and $1.31 in Q1. Q2 saw a slight rebound to $1.56. I imagine it will continue to go up from there.

Load factor continues to look strong on the long hauls, but it's pretty weak on the short hauls. Vegas to SFO was at 67 percent for June, LAX to SFO was 65 percent, San Diego to SFO was 71 percent, and SFO to Orange County was a dreadful 49 percent.

But overall, things are looking better and that's primarily due to cost control. The airlines unit costs declined down to 8.67 cents in Q2, but more important is the unit cost excluding fuel. That number now stands at 6.66 cents, a 9 percent drop from Q1 which in turn was a 14 percent drop from Q4. That's a very impressive drop.

The revenue side, however, still needs some help. Unit revenue did climb due to higher loads, but yields hit a low point of 8.32 cents. Only Q4 of 2007 was worse and that was just as they were getting started. Everyone is having revenue troubles these days, but Virgin America is already at a low point. They shouldn't be able to go much further.

Overall, these were very good numbers considering what we've seen in past quarters. Just keep an eye on that cash balance.