Virgin America earnings: CEO surprised at length of Dallas fare war – USA TODAY

11 months ago Comments Off on Virgin America earnings: CEO surprised at length of Dallas fare war – USA TODAY

DALLAS (AP) — Cheaper jet fuel and a tax gain helped Virgin America overcome lower fares and boosted fourth-quarter profit.

Virgin America’s average fare fell 9% from a year earlier to $187, partly because of a fare war in Dallas with Southwest Airlines and American Airlines.

CEO David Cush said in an interview Thursday that the average price passengers pay per mile could continue to fall through 2016 as airlines — including his own — keep adding to the supply of seats for sale.

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Cush said industrywide passenger-carrying capacity will rise about 5% this year, faster than economic growth. Virgin expects first-quarter capacity to be 14% to 16% higher than a year ago as it gets more planes.

And the company predicted that a key figure of revenue per mile will drop in the first quarter by 3% to 5%.

Cush said he was surprised by how long the fare war in Dallas has lasted — it began in October 2014 when Southwest and Virgin added long-haul flights from Dallas Love Field. At nearby Dallas-Fort Worth International Airport, American has responded to competition from discount Spirit Airlines by slashing fares too.

On flights to Los Angeles and New York, Southwest and American “are still selling roughly half of the airplane for under $100 per passenger,” Cush said. He said Virgin will not match all low fares from its rivals.

The Burlingame, Calif.-based company said fourth-quarter net income soared to $190.9 million from $3.9 million a year ago. Excluding a noncash gain of $173.5 million related to accounting of tax assets and other one-time items, Virgin earned $1.20 per share, matching the average forecast of eight analysts surveyed by Zacks Investment Research.

Revenue rose 5% to $391.5 million.

For the year, the company earned $340.5 million, or $7.66 per share, on revenue of $1.53 billion.

Virgin shares rose 65 cents, or 2.2%, to close at $30.53. They have dropped 14.5% in the past 12 months.

Virgin America earnings: CEO surprised at length of Dallas fare war – USA TODAY

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