Submit Press release  · eTN Team ·  Advertising  ·  eTN Awards  - Worldtourism Events    

Airline Industry

Virgin America to lease nine additional Airbus jetliners, start service to Orlando, Toronto

SUSAN CAREY  Mar 18, 2010

Virgin America, which started flying in 2007, said Thursday that it made arrangements to lease nine additional Airbus jetliners, allowing it to announce new service to Orlando, Fla., and Toronto. The company also said it will launch three additional destinations later this year.

The airline, in which Sir Richard Branson's Virgin Group Ltd., holds a 25% voting stake and a 49% economic interest, said it will resume its growth plans of adding about 12 aircraft a year to its fleet, according to David Cush, the president and chief executive officer.

Virgin America, based in San Francisco, lost what Mr. Cush said was a year of growth because of a protracted Department of Transportation inquiry into its ownership structure.

After U.S. investors that held most of the 77% of the airline's U.S.-controlled capital last year exercised their "put" options to sell their stakes back to Virgin Group, the Transportation Department launched a lengthy review of the airline's ownership. To comply with U.S. law, local airlines must prove that U.S. interests own at least a majority of the company and have a 75% voting stake.

After a recapitalization exercise in which one of the original U.S. investors returned in a bigger role and some of the airline's directors put money in, Virgin America in January was cleared as a "U.S. citizen." The airline also landed $70 million in new debt financing.

Mr. Cush said while Virgin Group was dealing with the DOT inquiry, it couldn't get financing for additional planes because "the financial community wanted to know the government wasn't going to pull the plug on us." With that cloud lifted, the company has been able to line up nine leased Airbus A-320 to be delivered this year and into early 2011, he said.

Four more aircraft, the last of the carrier's initial order for 32 A-320s, will be delivered in late 2011, bringing the fleet to 41.

The company said it intends to begin service to Orlando Aug. 19 with daily flights from both San Francisco and Los Angeles International Airport. It is applying for rights to add service to Toronto Pearson International Airport as early as this June from San Francisco and L.A.

As part of its growing emphasis on long-haul flights, Virgin America said it will quit flying to John Wayne International Airport in Orange County, Calif., from San Francisco in late May.

Currently, the airline flies up and down the West Coast and serves four East Coast destinations—Boston, Washington's Dulles International Airport, New York's Kennedy International Airport and Ft. Lauderdale, Fla. One of the three new destinations Virgin America will announce later this year will be a long-haul service, Mr. Cush said.

In the third quarter of 2009, the latest period for which Virgin America has reported its financial results to the DOT, the company posted its first operating income of $5.1 million. It had a net loss of $5.9 million on revenue of $158 million in that period. That was an improvement over the third quarter of 2008, when it lost $59 million on revenue of $114 million.

Mr. Cush said Virgin America will report its fourth-quarter 2009 results in a couple of weeks. He said the airline is "tracking ahead of plan" in terms of revenue and income.

Virgin America to lease nine additional Airbus jetliners, start service to Orlando, Toronto
Image via


Premium Partners