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Virgin America, Inc. reported second-quarter 2016 earnings per share of 93 cents, which missed the Zacks Consensus Estimate of $1.17 and also declined 36.3% year over year. The company underperformed in spite of low fuel costs which should have boosted the bottom line.
Quarterly revenues of $426 million also missed the Zacks Consensus Estimate of $447 million. However, on a year-over-year basis, revenues improved 3.6%.
Operating Statistics
Airline traffic, measured in revenue passenger miles, rose 16.2% year over year to 3,164 million in the second quarter of 2016. Capacity or available seat miles increased 15.3% to 3,689 million. Load factor (percentage of seats filled by passengers) was 85.8%, an increase of 70 basis points. Meanwhile, passenger revenue per available seat mile decreased 9% year over year to 10.23 cents.
Operating Expenses & Income
In the quarter under review, operating income improved 2.2% to $69.2 million from the prior-year quarter. Total operating expenses increased 7% year over year to $356.6 million. Fuel price (economic) was $1.51 per gallon, down from $2.18 in the year-ago quarter. Meanwhile, consolidated unit cost or cost per available seat mile (excluding fuel and profit sharing) increased 2.8% year over year to 7.47 cents.
At the end of the second quarter of 2016, Virgin America had $601 million in cash and marketable securities compared with $496.3 million at the end of 2015. During the quarter under review, the company had long-term debt of $396.4 million compared with $216.5 million at the end of 2015.
Merger Update
Virgin America is scheduled to be acquired by Alaska Air Group, Inc. (ALK - Free Report) by the fourth quarter of 2016, subject to customary closing conditions. The company received approval for the merger from its shareholders this July. At the closing of the acquisition, as per Virgin America, its stockholders are entitled to receive $57 for each share of the company owned by them, subject to certain terms.
Zacks Rank and Key Picks
Virgin America currently carries a Zacks Rank #5 (Strong Sell). A couple of better-ranked transportation stocks include SkyWest Inc (SKYW - Free Report) and Air Lease Corp. (AL - Free Report) . Both the companies carry a Zacks Rank #2 (Buy).
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Virgin America (VA) Q2 Earnings & Revenues Miss
Virgin America, Inc. reported second-quarter 2016 earnings per share of 93 cents, which missed the Zacks Consensus Estimate of $1.17 and also declined 36.3% year over year. The company underperformed in spite of low fuel costs which should have boosted the bottom line.
Quarterly revenues of $426 million also missed the Zacks Consensus Estimate of $447 million. However, on a year-over-year basis, revenues improved 3.6%.
Operating Statistics
Airline traffic, measured in revenue passenger miles, rose 16.2% year over year to 3,164 million in the second quarter of 2016. Capacity or available seat miles increased 15.3% to 3,689 million. Load factor (percentage of seats filled by passengers) was 85.8%, an increase of 70 basis points. Meanwhile, passenger revenue per available seat mile decreased 9% year over year to 10.23 cents.
Operating Expenses & Income
In the quarter under review, operating income improved 2.2% to $69.2 million from the prior-year quarter. Total operating expenses increased 7% year over year to $356.6 million. Fuel price (economic) was $1.51 per gallon, down from $2.18 in the year-ago quarter. Meanwhile, consolidated unit cost or cost per available seat mile (excluding fuel and profit sharing) increased 2.8% year over year to 7.47 cents.
VIRGIN AMERICA Price, Consensus and EPS Surprise
VIRGIN AMERICA Price, Consensus and EPS Surprise | VIRGIN AMERICA Quote
Liquidity
At the end of the second quarter of 2016, Virgin America had $601 million in cash and marketable securities compared with $496.3 million at the end of 2015. During the quarter under review, the company had long-term debt of $396.4 million compared with $216.5 million at the end of 2015.
Merger Update
Virgin America is scheduled to be acquired by Alaska Air Group, Inc. (ALK - Free Report) by the fourth quarter of 2016, subject to customary closing conditions. The company received approval for the merger from its shareholders this July. At the closing of the acquisition, as per Virgin America, its stockholders are entitled to receive $57 for each share of the company owned by them, subject to certain terms.
Zacks Rank and Key Picks
Virgin America currently carries a Zacks Rank #5 (Strong Sell). A couple of better-ranked transportation stocks include SkyWest Inc (SKYW - Free Report) and Air Lease Corp. (AL - Free Report) . Both the companies carry a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>