San Francisco Business Times - by Eric Young
Virgin America Inc. agreed to buy 40 new planes, a $3.2 billion order at list price, that will more than double the company’s fleet.
The new Airbus A320 planes will be delivered between 2013 and 2016, growing the low-cost carrier’s fleet to 90 aircraft. Virgin America has options to buy 20 additional aircraft with this order.
“This shows not only our confidence in the company but the confidence of the board as well as Airbus,” said Dave Cush, Virgin America’s CEO.
Expanding the company’s fleet beyond the current 28 planes, Cush said, “is important for where we want to be scale-wise.”
Based in Burlingame, Virgin America flies to 10 U.S. cities and will begin service to Orlando, Fla. in October. The airline said it will add at least one more U.S. city and two cities in Mexico by the end of the year.
The company said it will use the new planes, which each seat about 150 people, to begin new routes, adding an average of three to four new cities annually by 2016.
Virgin America will pay for the new planes through sale leasebacks and mortgage financing. Sale leasebacks are similar to leasing a car while mortgage financing is akin to buying a house, where lenders will finance about 80 percent of the cost after the airline pays 20 percent down.
Airbus’s list price for the twin-engine, single-aisle A320 is $81 million. Airlines usually receive volume discounts for big orders.
This is the biggest aircraft purchase for three-year-old Virgin America. The company continues to lose money but said it is closing in on profitability.
The privately-held company narrowed its first quarter loss 12 percent to $35.5 million and grew sales 46 percent to $146.8 million.
At the end of the first quarter, Virgin America had $28 million in cash and $102 million in total liquidity.
Given the company’s fiscal trajectory, Virgin America executives said the company could post a profit in 2010.
Virgin America expects to expand its base of operations at San Francisco International Airport. It will take control of half of 14 new gates scheduled to open next year at the renovated Terminal 2. Virgin America currently operates out of a few gates at SFO’s International Terminal.
The airline said it intends to double the number of employees to about 3,200 over the next three years. Many of those employees, which includes flight crews and workers at headquarters, will be based in the Bay Area.
Virgin America Inc. agreed to buy 40 new planes, a $3.2 billion order at list price, that will more than double the company’s fleet.
The new Airbus A320 planes will be delivered between 2013 and 2016, growing the low-cost carrier’s fleet to 90 aircraft. Virgin America has options to buy 20 additional aircraft with this order.
“This shows not only our confidence in the company but the confidence of the board as well as Airbus,” said Dave Cush, Virgin America’s CEO.
Expanding the company’s fleet beyond the current 28 planes, Cush said, “is important for where we want to be scale-wise.”
Based in Burlingame, Virgin America flies to 10 U.S. cities and will begin service to Orlando, Fla. in October. The airline said it will add at least one more U.S. city and two cities in Mexico by the end of the year.
The company said it will use the new planes, which each seat about 150 people, to begin new routes, adding an average of three to four new cities annually by 2016.
Virgin America will pay for the new planes through sale leasebacks and mortgage financing. Sale leasebacks are similar to leasing a car while mortgage financing is akin to buying a house, where lenders will finance about 80 percent of the cost after the airline pays 20 percent down.
Airbus’s list price for the twin-engine, single-aisle A320 is $81 million. Airlines usually receive volume discounts for big orders.
This is the biggest aircraft purchase for three-year-old Virgin America. The company continues to lose money but said it is closing in on profitability.
The privately-held company narrowed its first quarter loss 12 percent to $35.5 million and grew sales 46 percent to $146.8 million.
At the end of the first quarter, Virgin America had $28 million in cash and $102 million in total liquidity.
Given the company’s fiscal trajectory, Virgin America executives said the company could post a profit in 2010.
Virgin America expects to expand its base of operations at San Francisco International Airport. It will take control of half of 14 new gates scheduled to open next year at the renovated Terminal 2. Virgin America currently operates out of a few gates at SFO’s International Terminal.
The airline said it intends to double the number of employees to about 3,200 over the next three years. Many of those employees, which includes flight crews and workers at headquarters, will be based in the Bay Area.
Eric Young’s beats include law, government, transportation and sports for the
Contact him at eyoung@bizjournals.com or (415) 288-4969.
Read his blog postings at Bay Area BizTalk.
