Virgin America going out of business?

[luv2sleep]

Has anyone heard this? I've already purchased non refundable tickets from California to Orlando for June. Someone mentioned them going out of business possiblyin April. Anyone have info on this? .

 

[Paging Tom Morrow]

Since Delta just agreed to purchase 49% of Virgin, I find this HIGHLY improbable.

 

[luv2sleep]

Since Delta just agreed to purchase 49% of Virgin, I find this HIGHLY improbable.

I know very little about business practices so does this mean Virgin was in trouble and Delta bailed them out?

 

[Paging Tom Morrow]

Not necessarily. Virgin was losing money over the past couple of years, but it doesn't mean they were in trouble. Accounts have a way of losing money even when people are bringing home money.

 

[lost*in*cyberspace]

Virgin America has had financial problems for years and they are still flying.

 

[luv2sleep]

Ok. Thanks. Someone told me to be worried when I was talking about flying with them next January. I guess there's nothing to worry about though.

 

[Horace Horsecollar]

Since Delta just agreed to purchase 49% of Virgin, I find this HIGHLY improbable.

The OP is asking about Virgin America, a U.S. domestic airline based in Burlingame, California.

Delta did not buy 49% of Virgin America. Delta bought 49% of Virgin Atlantic, which is an international airline based in Crawley, United Kingdom.

The two airlines were both started by entrepreneur Sir Richard Branson, and both have aircraft painted with a same logo on the tail. However, they are entirely different companies. (There's also Virgin Blue in Australia.)

Fast-growing Virgin America is not a profitable airline (although it reported an operating profit for the most recent reported quarter, the third quarter of 2012).

However, there have been no reports in the business press about Virgin America "going out of business possibly in April." I don't know where the OP heard such a rumor. The only reports have been that Virgin America is slowing its rapid growth somewhat, including slowing down the delivery of new aircraft.

With the U.S. legacy carriers consolidating down to just three, there are opportunities for new airlines, especially ones like Virgin America that provide a superior product.

That said, there's no telling what the status of Virgin America will be in five years (thriving? defunct? just hanging on? merged into a another airline such as JetBlue?). But I absolutely would not worry about tickets for June 2013.

 

[luv2sleep]

The OP is asking about Virgin America, a U.S. domestic airline based in Burlingame, California.

Delta did not buy 49% of Virgin America. Delta bought 49% of Virgin Atlantic, which is an international airline based in Crawley, United Kingdom.

The two airlines were both started by entrepreneur Sir Richard Branson, and both have aircraft painted with a same logo on the tail. However, they are entirely different companies. (There's also Virgin Blue in Australia.)

Fast-growing Virgin America is not a profitable airline (although it reported an operating profit for the most recent reported quarter, the third quarter of 2012).

However, there have been no reports in the business press about Virgin America "going out of business possibly in April." I don't know where the OP heard such a rumor. The only reports have been that Virgin America is slowing its rapid growth somewhat, including slowing down the delivery of new aircraft.

With the U.S. legacy carriers consolidating down to just three, there are opportunities for new airlines, especially ones like Virgin America that provide a superior product.

That said, there's no telling what the status of Virgin America will be in five years (thriving? defunct? just hanging on? merged into a another airline such as JetBlue?). But I absolutely would not worry about tickets for June 2013.

Thank you!

 

[luv2sleep]

Oh, and someone in my cruise meet thread said the April thing.

 

[jlewisinsyr]

Also remember, losing money from an accounting perspective, doesn't mean they are draining their cash reserves either.

 

[pr surfer]

Since Delta just agreed to purchase 49% of Virgin, I find this HIGHLY improbable.

Delta purchased a stake in Virgin ATLANTIC, not Virgin America. Same brand, different companies.

 

[steve_rob]

I know that the person who told the OP of this "rumor" won't know where it came from originally, but it would be interesting if we found out, because there's some history behind this.

About 20 years ago when Virgin Atlantic had not long started up, some staff at British Airways started using dirty tricks, including hacking into Virgin computer systems and holding briefings with major US clients and travel agents telling them that "Virgin was about to go bust" to try and drive customers back to BA who had gone over to Virgin (BA was losing a lot of custom at that time, having previously had 90% share of the US to UK market). Only trouble was, Virgin eventually found out and sued BA for millions of dollars - the other airlines BA had apparently targeted in this scheme, unfortunately went out of business before it was uncovered.

Now obviously this Virgin America rumor has nothing to do with BA and may not be the work of any airline at all, but it just goes to show the power of a rumor and how many companies will stoop to any level just to disparage a competitor!

 

[phxdryheat]

I know that the person who told the OP of this "rumor" won't know where it came from originally, but it would be interesting if we found out, because there's some history behind this.

I said it. Based on Virgin America's cash burn rate, I stated that if they didn't get another large chunk of money, it wouldn't surprise me if they closed their doors by April fool's day. Of course they've now announced new routes to Austin, Anchorage, and San Jose. Those new routes generate low priced advance ticket sales so it looks like they're burning the furniture to keep the house warm.

In December 2011, Virgin America received a last minute $150 million loan that has kept their doors open. But for that last minute money, Virgin America would have been out of business in early 2012.
At the end of the third quarter 2012, Virgin America had $75 million cash on hand.

Virgin America burned through $14 million cash in the fourth quarter of 2011 and $49 million cash in the first quarter of 2012. If they burn through similar numbers, that pretty much puts them out of business without another big loan.

If you go to Virgin America's website, you you will find all of their quarterly reports in the press release section. That way you can independently verify this information.

Virgin America has still not released their fourth quarter 2012 results.

I simply recommend caution here; don't buy tickets more than 60 days in advance and only use a credit card. This will make refunds possible if they do not get additional financing.

If the original poster is flying out of San Francisco, I recommend checking your flight schedule. Virgin America has scaled down service from San Francisco to Orlando.

Edit: As for Virgin Atlantic, it is a separate subdivision of Virgin Group. They're also not doing too well; there was an article this last weekend in British papers stating that Virgin Atlantic lost ~$200 million last year. Virgin Group sold most of its stake in Virgin Media recently; looks like they're raising cash in order to keep things going for other portions of the business.
There are conflicting rumours out there as to whether or not they're going to put another $200 million into Virgin America or shut it down if/when it runs out of cash.
Again, I simply recommend caution. I remember tourists stranded in Hawaii after both Aloha airlines and ATA shut down within two weeks of each other.

 

[PatMcDuck]

I will keep my eyes on Virgin America. I have flights on there for August, for my D23 trip, RT from Newark NJ to LAX.

I had to change this from flights out of Philadelphia, because the Philly flight times changed by 7 hours on my return.....

The prices were better than the regular airlines, or the other discounters, at the time I booked. When I called to make the switch, I was on hold almost an hour, which is not good though.