grt2106

It comes up time and time again on here- but with the recent Q2 reports for 2012- I ask again-

How does an airline that has never had a profitable year, nor ever two profitable quarters continue to grow and expand?

BearX220

How does any company that has never made a dime, from Twitter to Zipcar to Tully's Coffee, continue in business? Faith-based capital investment.

FWAAA

I don't believe that VX has ever had one profitable quarter, let alone two.

Unrestricted cash continues to dwindle: At the end of 2011, VX held $160 million in unrestricted cash. Six months later, on June 30, that cash positition had fallen to just $82 million. At that pace, VX will be out of cash by December 31 unless Beardy loans (or finds friends to loan) VX more money.

On December 21, 2011, VX borrowed $150 million, almost half of which is gone already. $78 million cash gone in six months.

Zomba

Sure they lose money on every flight, but they can make it up with volume

Seriously, though, they are hardly the first new company to experience several years of initial losses. If they want to survive, though, I expect that they will need to start turning a profit soon. If the economy starts improving, then maybe they can develop into a stable, profitable airline. Otherwise, their business is in trouble.

eponymous_coward

They were supposed to start having profitable quarters in 2009. Then 2010. Then 2011. Then 2012...

Ambraciot

It's tough to negotiate unloading an airline on a larger partner when the potential partners have problems of their own. The obvious candidates remain AA and DL, though a wild card like AS could easily enter the equation.

silver-tls

Alot of the startup costs were spread over multiple years. The investors knew what they were doing...not a slam dunk and great risk involved.

eponymous_coward

I would say the odds of AS buying VX are approximately somewhere between nil and zero- they'd be instantly thrust into competition with their big USA codeshare partners AA and DL (which is someplace where you don't want to be), the fleets are massively incompatible in terms of aircraft types and customer amenities, and I doubt that the combined entity is really all that much better off than AS by itself.

AA and DL would be much better merger partners, should that come down the line... and I think Cush is an ex-AA exec, and there are some ex-Song execs at VX too.

BearX220

Virgin has nothing Alaska wants or needs to buy.

By now it's clear Virgin America has no moneymaking model. It's a great product, but the company's fortunes have been wrecked by insane pricing, routing and marketing decisions.

agentpaul001

Virgin looks great, but as mentioned their routing seems all over the place. They're attempting to tackle too much at once with too little.

That said they'll still have plenty of suitors wanting to shovel money in before a possible IPO.

oldsmoboi

Never have flown them. What is the compelling reason to fly them over UA, AA, or BA?

crazyMRer

This is the Virgin America forum - they do not fly international (compete with BA).
They are one of the newer domestic US airlines.

http://virginamerica.com/travel/flight-routes.html

Reasons some people prefer them over AA/UA:

- Better first class seat than UA/AA on most routes (except on AA/UA premium trans cons, where AA/UA use a better configuration).
- Better in flight entertainment fleet wide
- Brand New planes

For me, I do not prefer the Virgin America model because I like free domestic upgrades and redeeming miles earned from cheap domestic trips to pay for expensive international redemption trips and the Virgin America frequent flyer program does not provide a good return for this.

Zacnlinc

For the same reason you do t like VX are some of the reason I left UA this year and have made it work with VX. Sure, they don't fly everywhere, but they get me coast to coast and close enough to the point my car rentals are surely used!

Sure, having to pay for the upgrades is a buzz kill for some, but at least the service and the treat is much better in my opinion. One of the joys has been to have an empty seat or more on my transcontinental flights than to expect first class service on the same flight with 24+ on a UA flight! Whatever!

crazyMRer

You live in the city with the most VX flights; I only have two from BOS. The VX route map is very small compared to UA but if they meet your needs, great.
If you are happy paying more for your First upgrade than I pay for my ticket or can afford to avoid the uncertainly of complimentary upgrades clearing by purchasing First Class, VX may be the best match for you. (I routinely fly trans-con for $300 round trip (complimentary upgraded more often than not) - yes I know I am not profitable to the airlines - but my job as a consumer is to choose what best meets my needs, not the airline's) Most business travelers must pay much more than I do and what best meets your needs will often be different than for me.

VX is an excellent airline for some. I simply gave a couple reasons it is not for me. Why the attitude?

grt2106

Boys, boys, let's not argue over personal preferences in airlines.

I think you bring up a stellar point though- you're fighting over who can be -less- profitable to a company.

If you don't live in SFO or LAX, you would likely only be flying VX for the PRICE or because someone told you it's a great experience.

As far as FF, they finally got in a program that isn't worthless, but that said- unless you're consistently flying from the west coast to the east, NO one will ever earn that earnings threshold.


Why would you choose VX over AA or UA, is the wrong question, the question is why would VX be attempting to draw customers from AA or UA when there isn't a profit to be made from it.