Virgin America (VA) Tops Q3 EPS by 8c

Virgin America (NASDAQ: VA) reported Q3 EPS of $1.64, $0.08 better than the analyst estimate of $1.56. Revenue for the quarter came in at $410.9 million versus the consensus estimate of $406.28 million.

• Revenue per Available Seat Mile (RASM): Passenger revenue per available seat mile (PRASM) decreased 2.7 percent compared to the third quarter 2014, to 11.05 cents. Year-over-year PRASM decline was driven by a 1.0 point decrease in load factor and a 1.8 percent decrease in yield. Total RASM decreased 1.6 percent year-over-year.
• Cost per Available Seat Mile (CASM): Total CASM excluding special items decreased 7.7 percent compared to the third quarter of 2014, to 10.13 cents. Decreases in fuel costs contributed to the decline in CASM, partially offset by increases in salaries, wages and benefits, landing fees and other rent and aircraft maintenance. Salaries, wages and benefits costs included a $7.1 million accrual for teammate profit sharing and related payroll taxes. CASM excluding special items, fuel costs and profit sharing for the quarter increased 11.0 percent year-over-year, to 7.34 cents.

"Virgin America continued its strong financial performance in the third quarter with record earnings and margins," said David Cush, Virgin America's President and Chief Executive Officer. "We believe we are well-positioned to grow the airline while maintaining our low cost model, driving year-over-year industry unit revenue outperformance and improving ancillary revenue. We're also investing in our product so that we can continue improving what is already the best, most consistent guest experience in the industry."

Fourth Quarter 2015 Outlook

The Company's expectations for the fourth quarter of 2015 are based on currently available information. These expectations are forward-looking, and actual results could differ materially depending on market conditions and the factors set forth under "Forward-Looking Statements" below. You should not place undue reliance upon these expectations.

Virgin America is scheduled to take delivery of three A320 aircraft during the fourth quarter of 2015, of which it expects to place two into operational service prior to year-end. The Company expects capacity, as measured by available seat miles, to increase by approximately 9.5 percent to 10.5 percent for the fourth quarter of 2015 as compared to the fourth quarter of 2014. Based on current revenue trends, the Company expects PRASM to decrease between 3.0 percent and 5.0 percent versus the fourth quarter of 2014. The Company expects CASM excluding special items, fuel and profit sharing to increase between 2.0 percent and 3.0 percent versus the fourth quarter of 2014. CASM excluding special items, fuel and profit sharing is increasing in the fourth quarter due primarily to Virgin America's previously announced pay and benefit initiatives that were implemented earlier in the year, partially offset by underlying unit cost improvement as the company resumes capacity growth.

Based on Virgin America's hedge portfolio and current market prices for aviation fuel products, the Company expects Virgin America's economic fuel cost per gallon inclusive of related taxes and hedge costs to average between $1.75 and $1.85 for the fourth quarter of 2015. This number may change depending on fluctuations in market prices for jet fuel during the quarter.

For earnings history and earnings-related data on Virgin America (VA) click here.

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