Virgin America’s VA second-quarter 2015 adjusted earnings of $1.46 per share substantially beat the Zacks Consensus Estimate by 18 cents. Results were aided by low fuel costs. The earnings beat pleased investors. Consequently, the stock gained 7.49% to close the Jul 30 trading session at $32.02 per share. The California-based low-cost airline, partly owned by British billionaire investor Richard Branson, had gone public in Nov 2014.
Operating revenues came in at $400.9 million, surpassing the Zacks Consensus Estimate of $393 million. Revenues improved 0.5% from the year-ago figure. Passenger revenues contributed the bulk (89.7%) of the total revenue and were up 0.4% from the year-ago figure. Other revenues, up 1.1%, accounted for the balance.
During the second quarter, passenger revenue per available seat mile (PRASM) inched up 0.5% to 11.24 cents on the back of a 20 basis point-increase in load factor (% of seats filled) to 85.1%. Yield per passenger mile improved to 13.21 cents from 13.17 cents a year ago. Revenue per available seat mile (RASM) improved 0.6% during the reported quarter to 12.53 cents.
Capacity was flat year over year in the second quarter of 2015. Cost per available seat mile (excluding special items, fuel costs and profit sharing) rose 7.1% to 7.27 cents. Fuel cost per gallon (excluding special items) declined 29.3% during the quarter to $2.20.
Guidance
The carrier expects capacity to increase in the range of 2% to 3% in the third quarter of 2015 on a year-over-year basis. Moreover, the company projects PRASM (a measure of unit revenue) to decrease in the band of 2% to 4% in the third quarter. The carrier expects economic fuel cost (inclusive of related taxes and hedge costs) to average between $1.90 and $2 per gallon in the third quarter.
Cost per available seat mile (excluding fuel and profit sharing) is projected to increase 10.5% to 11.5% in the third quarter and from 2% to 3% in the final quarter of 2015. Capacity in 2016 is projected to increase in the band of 13% to 15%. Cost per available seat mile (excluding fuel and profit sharing) is projected to decrease in the band of 1% to 2% in 2016.
Zacks Rank
Currently, Virgin America has a Zacks Rank #3 (Hold). Better-ranked stocks in the airline space are Ryanair Holdings RYAAY, Allegiant Travel Company ALGT and China Eastern Airlines Corp. Ltd. CEA. All the three stocks carry a Zacks Rank #1 (Strong Buy).
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