Tuesday, June 17, 2008

Virgin America Spin

Nice try, Virgin America, but the way I read this announcement from you today, I would say you are in serious retreat, 10 months after you started up. Bottom line: Virgin America is cutting capacity 10 percent (I'd read transcon on that, which is where Virgin America has to compete).

And for cryin' out loud, ain't nobody in town going to buy this jive about the need to "adjust for seasonal consumer demand."

The announcement:

SAN FRANCISCO, June 17, 2008 (PRIME NEWSWIRE) -- Virgin America, the California-based carrier, today announced it will add flights on select high-demand routes, while reducing capacity on off-peak flights this fall, to adjust for seasonal consumer demand for air travel amid high fuel prices. The carrier will add select flights on new and high demand routes. Other than targeted cuts to off-peak flying, the carrier's business model remains the same with no changes to fleet or growth plans, planned new routes or cities, or cuts to its still growing workforce.

"These temporary schedule reductions and strategic additions better reflect the industry landscape we anticipate, given that consumer demand for air travel will be affected by seasonality and, potentially, by higher gas prices in the fall,'' said Virgin America President and CEO David Cush. "As a small, growing carrier, we can trim schedules from less profitable, off-peak flights and add limited capacity on high-demand routes. These are smart business changes that allow us to continue to offer the high-value service we are known for, and support our plans to expand into new markets and add new routes.''

System-wide, Virgin America plans to trim mid-week flights during off-peak periods.
As a result, the carrier will fly at 10 percent less capacity in the fourth quarter than its previously projected fourth quarter capacity. At the same time, the carrier will add flights and frequencies in high-demand markets and continue to grow into new markets. Its year-over-year growth percentage will still be a net positive of 88 percent.

Virgin America will add daily frequencies on its SFO-LAS route on high-demand travel days. On September 4, Virgin America will launch daily non-stop flights between New York's John F. Kennedy (JFK) and Las Vegas McCarran (LAS) International Airports. Recently, Virgin America also announced its hopes to launch multiple flights a day from both San Francisco International Airport (SFO) and Los Angeles International Airport (LAX) to Chicago O'Hare International Airport later this year, pending government approval.

"We have a strong business model and financing, the most fuel efficient fleet in the U.S., and an upscale, competitively-priced service that has been embraced by the traveling public,'' added Cush. "We are in this for the long-haul, and these targeted adjustments will allow us to grow and remain well-positioned and competitive.''


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