Virgin America Q4 Earnings Beat Estimates; Stock Surges

Virgin American reported the highest fourth quarter net income in the history of the company as it benefited from the declining oil price during the period

The shares of Virgin America are trading higher after the airline company reported better-than-expected earnings for the fourth quarter. The stock price of the company was up more than 5% to $36.11 per share at time of this writing around 11:04 A.M in New York.

Virgin America financial results

During the fourth quarter, Virgin America reported that its net income increased 98.4% to $28.1 million (excluding special items) or $1.16 per share. The company said its net income was the highest for a fourth quarter in its history.

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Virgin America’s operating income was $34.2 million. Its operating revenue rose 3.4% to $372.2 million.  Analysts expected Virgin America to deliver $0.80 in earnings per share on $371 million in revenue based on data compiled by Thomson Reuters.

The company said its revenue per available seat mile (RASM) climbed 3.7% while its cost per available seat mile (CASM) increased 0.7% (excluding special items.

Virgin America benefited from the declining oil prices during the quarter. According to the company its fuel costs including taxes and the impact of hedges declined 8.9% year-per-year. The amount excludes $2.8 million of mark-to-market costs for fuel hedges that will mature in 2015.

In a statement, Virgin America CEO David Cush said, the company experienced a remarkable year on every from last year. He said, “We achieved record profitability and significantly strengthened our balance sheet by going public in the second largest airline IPO history.”

Virgin America completed its IPO on November last year, which increased its cash by $214 million and reduced its debt significantly. The company ended the quarter with $394.6 million in cash and cash equivalents.

Virgin American first quarter outlook

For the first quarter of 2015, Virgin America estimated that its capacity (measured by available seat miles) will increase around 2% to 3%. The company expected its PRASM to change between -1% and +10%. Its CASM excluding fuel and profit sharing is expected to increase between +1% and +3%.

Virgin America expected its economic fuel costs including related taxes and hedge costs will be at an average of $2.45 to $2.55 per gallon. The company said the amount may change depending on the fluctuation in market prices for jet fuel during the quarter.