Virgin America reports better than expected results as lower fuel costs offset fall in revenue per available seat mile

 
James Nickerson
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Branson said he was sad to see Virgin America go earlier this month (Source: Getty)

Virgin America, currently awaiting a green light on the merger with Alaska Air Group, has posted better than expected first quarter results, helped by low fuel costs.

The airline posted first quarter net income, excluding special items, of $18.4m (£12.6m), an increase of 74.5 per cent from the first quarter of 2015. Earnings per share, excluding special items, was $0.41, a 24 per cent rise.

On a GAAP basis net income was $17.5m for the three months ending 31 March. Revenue jumped 11.5 per cent to $364m.

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"Virgin America performed exceptionally well as we entered 2016," said David Cush, Virgin America's president and chief executive.

"We reported record first quarter net income driven by continued unit revenue outperformance as compared with the domestic industry and the benefit of lower fuel costs.

"Importantly, we achieved these results with capacity growth of nearly 16 per cent in the first quarter while also maintaining our focus on non-fuel unit costs. The proposed merger with Alaska Air Group recognises the successful business model we have built at Virgin America in just nine short years."

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The airline paid an average of $1.57 per gallon of fuel, 36 per cent lower than a year ago.

That helped offset a fall in revenue per available seat mile, considered an important industry metric, which fell by 3.8 per cent.

The news comes in the same month it was announced Alaska Air submitted paperwork to the government on its plan to acquire Virgin America.

Alaska Air Group is to buy Virgin America for $57 per share, it was announced in early April, but the US Federal Trade Commission and the US Department of Justice will now review the proposed merger.

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