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Virgin America a hit, but losing money

Old 08-04-2012, 07:05 PM
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Default Virgin America a hit, but losing money

[QUOTE]
Rewind to Aug 8, 2007: Virgin America's two maiden flights - one arriving from New York, the other from Los Angeles - land simultaneously on adjoining runways at San Francisco International Airport before a crowd of Bay Area dignitaries, a scrum of journalists and a squadron of teenage cheerleaders in scarlet uniforms.
"Virgin! Virgin!" they cheer as passengers file into the terminal. "Branson! Branson!" they shout as Virgin America's high-profile minority-owner - the shaggy-haired British billionaire Richard Branson - gives a two-handed wave. Branson grins broadly, surveying the crowd at SFO, which the startup, low-cost carrier has chosen as its hub airport.
Fast-forward to Aug. 8, 2012: Virgin America marks five years of flying.
Award-winning, money-losing Virgin America is a hit with travelers, especially the high-flying Silicon Valley executives and multitasking digital media addicts courted by the Burlingame carrier. With 2,600 employees, about half of them in the Bay Area, Virgin America operates 93 flights a day on 52 aircraft (average age: a young 3.3 years) to 15 cities around the country and three destinations in Mexico. Last year, the airline flew 5 million passengers; it expects to board 6.6 million this year.
Branson's London company Virgin Group Ltd. owns 49 percent of the stock and has a 25 percent voting stake, the maximum allowed for foreign nationals under U.S. law. American investors own 51 percent of Virgin America, which licenses the Virgin brand.
"I've always had the dream of helping create a really good, quality airline in the U.S.," Branson said in an e-mail. "America has the best of everything, but for whatever reasons the airline industry there has forgotten entirely about the guest. Virgin America launched with the guest in mind. No matter where I go in the world, people tell me they love Virgin America. That is pretty amazing to hear when you are in, say, Malaysia."
Wow factor
Indeed, the carrier has a wow factor. Boarding a Virgin America flight, bathed in 12 alternating shades of mood lighting and awash in globalized dance/trance music, is not unlike rolling into a late-night club, cocktail in hand. Unlike low-cost carriers that fly with single-class seats and service, Virgin America offers first class, premium economy and economy.
Virgin America's stylish aircraft interior design, avid embrace of in-flight technology and young, energetic staff account for much of its popularity. So do its fares.
Tom Parsons, chief executive officer of BestFares.com, said Virgin America often offers the most attractive fares in the country, especially on transcontinental flights. "They are probably the most consistent airline out there giving deals day-in, day-out."
For all the buzz, though, there is one thing Virgin America hasn't done: Make money.
Losses over 5 years
Buffeted by the recession, high fuel costs and the expense of expanding its route network, it has recorded but one profitable quarter since the airline went wheels-up. In the first quarter of this year the company reported a loss of $49 million on revenue of $267 million. Since 2007, Virgin America has recorded a net loss of $671.3 million and an operating loss of $447.3 million.
If Virgin America can bring its financials in line with its high marks for style and service, it will have a much smoother flight path.
"Virgin pays attention to design, product and service details," said Henry Harteveldt, a San Francisco analyst for Atmosphere Research Group. "Virgin is the most experiential of U.S. airlines."
Long before it sold its first ticket, Virgin America made an impact at SFO.
In May 2007, three months before Virgin America's first flights, JetBlue Airways flew to SFO for the first time. JetBlue's founder and then-CEO, David Neeleman, told The Chronicle that Virgin America's imminent arrival was one reason JetBlue entered a market it had previously ignored. "It's going to be a party," he said.

Read more: Virgin America a hit, but losing money - SFGate
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Old 08-04-2012, 07:22 PM
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If airlines fell under the regulation of the FTC instead of the DOJ, I am pretty sure they would be a candidate for predatory pricing.

Virgin America was created, according to quotes from Branson himself, to kill off United, or alternatively Delta. Since it appears Branson now desires to partner with Delta both over both oceans and United is going no where ... what's the point of Virgin?

Wasn't there some news a while back that US investors were insulated from losses?
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Old 08-04-2012, 07:37 PM
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Is Delta's ex. President, Fred Reid, still running VA?

Fred was the one who put out the pamphlet on how Business Men prefer hourly service, from every where to anywhere and RJ's were going to take over the world. We called him 'RJ Fred'.

He and Leo the CEO bought hundreds of them for Com Air and ASA, to replace 50% of our domestic flying, while laying off 1,400 Delta pilots.

http://www.bizjournals.com/pacific/s...8/daily57.html
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Old 08-04-2012, 07:50 PM
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FlexJet now ...

Since becoming President of Flexjet in 2008, Reid has successfully transformed the company into the industry’s only private aviation solutions provider to offer comprehensive access to a full portfolio of products, ranging from whole aircraft management and fractional jet ownership to jet cards and charter brokerage services. Reid was also the driving force behind Flexjet’s alliance with Korean Air, marking the first arrangement of its kind between a North American fractional jet company and an international airline. In another industry first, Reid initiated the creation of Flexjet’s innovative Customer Account Management (CAM) program, consolidating all client-facing departments to provide owners with a single point person to streamline requests.

Prior to joining Flexjet, Reid’s executive management background includes experience at four of the world’s major airlines, most recently as the founding Chief Executive Officer of Virgin America. He joined Virgin in 2004 and shaped America’s “next generation airline” from the ground up. While serving as President of Delta Airlines, Reid led the creation of the airline’s low-fare “Song”- branded airline and headed Delta Connection, the world’s largest fleet of regional jets. He also built SkyTeam, regarded as the most integrated global airline alliance, and directed the successful acquisition of regional carriers ASA and Comair by Delta.
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Old 08-04-2012, 08:41 PM
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Originally Posted by Bucking Bar
Wasn't there some news a while back that US investors were insulated from losses?
He gives them guaranteed double digit annual returns backed by his foreign money, then calls that "US money" since it technically came from US investors. When that isn't enough, he buys tons of tickets he never intends on using with his personal accounts to funnel them revene under the guise of "just another citizen of the world" purchasing goods and services.

They've lost what, half a billion in 5 years and are less than 10% the size of most legacies, are always down to their last 20 or so mil while losing way more than that, yet are still around. He's an egomaniac blowing through his beer money until he finally breaks through or gives up.
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Old 08-04-2012, 11:17 PM
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Originally Posted by gloopy
He gives them guaranteed double digit annual returns backed by his foreign money, then calls that "US money" since it technically came from US investors. When that isn't enough, he buys tons of tickets he never intends on using with his personal accounts to funnel them revene under the guise of "just another citizen of the world" purchasing goods and services.

They've lost what, half a billion in 5 years and are less than 10% the size of most legacies, are always down to their last 20 or so mil while losing way more than that, yet are still around. He's an egomaniac blowing through his beer money until he finally breaks through or gives up.
gloopy,

Why would VA lose so much money if Branson were buying all the tickets?

That might be possible if the tickets were cheaper than other airlines (they aren't), or if he were buying, say, half the seats and the planes were flying empty (our average load factor is around 80%).

So really, you are full of BS.

Look, I work there, and myself and all the rest of us know that things don't look good. But let's try to stick to reality and leave fantasy to folks like Tolkein. OK?
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Old 08-05-2012, 03:37 AM
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Originally Posted by Timbo
Is Delta's ex. President, Fred Reid, still running VA?

Fred was the one who put out the pamphlet on how Business Men prefer hourly service, from every where to anywhere and RJ's were going to take over the world. We called him 'RJ Fred'.

He and Leo the CEO bought hundreds of them for Com Air and ASA, to replace 50% of our domestic flying, while laying off 1,400 Delta pilots.

Passed over for CEO, Delta president quits - Pacific Business News
Fred Greed was out by the end of 2007. Try to keep up Timbo.
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Old 08-05-2012, 05:39 AM
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Originally Posted by Fred Flintstone
Fred Greed was out by the end of 2007. Try to keep up Timbo.

Why would I 'try to keep up' with VA?

I can barely keep up with my OWN company!

Shall I now quiz you on all the VP's, and their dates of arrival/departure, for the past 5 years, at DL?

Fred was all about Fred, and outsourced as much flying as he could, just go back and reread that last paragraph. He bought hundreds of RJ's to fly the domestic stuff, and inked International Code Shares for the International stuff. Our pilot group went from 10,400 on 9/11/2001, down to about 7,300 just prior to our merger with NW.

" While serving as President of Delta Airlines, Reid led the creation of the airline’s low-fare “Song”- branded airline and headed Delta Connection, the world’s largest fleet of regional jets. He also built SkyTeam, regarded as the most integrated global airline alliance, and directed the successful acquisition of regional carriers ASA and Comair by Delta. "

Leo Mullin was another piece of work, he came to DL from McKinzie and Company, a consulting firm who's mantra is; "Outsoruce everything to the lowest bidder".

https://alumni.mckinsey.com/alumni/d...ws/News614.jsp

Last edited by Timbo; 08-05-2012 at 06:05 AM.
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Old 08-05-2012, 07:14 AM
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I'm going to start my own airline.
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Old 08-05-2012, 08:47 AM
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Originally Posted by jayme
gloopy,

Why would VA lose so much money if Branson were buying all the tickets?

That might be possible if the tickets were cheaper than other airlines (they aren't), or if he were buying, say, half the seats and the planes were flying empty (our average load factor is around 80%).

So really, you are full of BS.

Look, I work there, and myself and all the rest of us know that things don't look good. But let's try to stick to reality and leave fantasy to folks like Tolkein. OK?
Its a matter of degree. He isn't doing it on every seat every flight, or even half the seats on every flight. But he's doing it as a way to "legally" launder his dirty foreign money into his "American" company. 5 seats here, 10 seats there, and not on every flight but at the end of the year it really adds up. But the majority of his dirty foreign money is coming from hand picked "US investors" with "US money" locking in double digit bonded non defaultable returns backed by his 100% foreign money. And Gandalf didn't tell me that. A very high level VP (or higher) at a major US airline did. They are on to him but the DOJ is under massive pressure to look the other way as long as he has a thread of pseudo-legality to point to and as long as he keeps the amounts in question below a certain point of public outcry.
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