Thursday, July 5, 2012 at 11:19 pm.

Virgin America reports $49 million Q1 operating loss on $267 million sales

Virgin America’s focus on customer service and its in-flight amenities — popular with the tech set — haven’t yet translated into profits, as it continues to grow.

The privately held company recently reported select Q1 financial results, with CEO David Cush noting the company was “disappointed that our operating results fell short of our expectations for the quarter.”

This is my first time digging into the company’s financials, so I figured they were worth sharing. (Via Airliners.net.) For context, note that Delta, US Airways, JetBlue and Southwest were profitable during Q1, while United and American were not.

  • Demand and sales are growing faster than capacity: Virgin America reported a 38% year-over-year increase in Q1 “revenue passenger miles” (demand) vs. a 33% increase in revenue vs. a 29% increase in “available seat miles” (supply).
  • Profitability is heading in the wrong direction: Virgin America’s -18.2% operating margin was worse than its -14.7% operating margin a year ago. Its biggest cost increase was fuel, which grew 47% year-over-year. For every dollar in revenue during the quarter, Virgin spent $0.46 on fuel. Virgin finished March with $111 million in unrestricted cash.
  • Virgin’s back-end-reservation-system-switching fiasco cost it real money, but wasn’t a catastrophe: An estimated $10-15 million in lost Q1 revenue because of the switch to Sabre. But the new system allows it to link its frequent flier program to Virgin Atlantic and Virgin Australia, which could theoretically help business.
  • 82.6% of its flights arrived on time, which was worse than AirTran, American, Delta, Southwest, and US Airways, but better than JetBlue and United. Virgin’s baggage handling was the best in the business, however: 0.94 reports per 1,000 passengers, vs. 1.8 for JetBlue, 2.2 for Delta, 2.9 for American, 3.6 for United, etc. (Source: DOT Q1 Air Travel Consumer Report, PDF.)

I won’t be following Virgin America’s financial results religiously, but given its close ties to the tech world — and the idea that it’s supposedly trying to disrupt a crappy, broken industry — they’re worth keeping an eye on.