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America Airlines Essay

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irgin America Airlines is a relatively new U.S airlines when compared to other major carriers. When Sir Richard Branson announced his desire to bring a new low-cost high-quality airline to the United Sates in 2005 there was significant skepticism due to the already saturated U.S. market. Those concerns have turned out to be incorrect when viewed with the current financial performance and the pending purchase of Virgin America by the Alaska Air Group. The purchase set at $57 per share or approximately $4 Billion was announced on April 04, 2016 (BBC News Business, 2016). This was at a significant premium when viewed with the price per share prior to the announcement on April 01, 2016 of $38.90 an increase of 47% above the existing value (Google Finance, 2016).

Virgin America has maintained continued and increasing profits since 2013. This most certainly influenced Alaska Air Group’s decision to purchase the airline. The major turnaround happened between 2012 and 2013 when Virgin America posted net profits of -$145.4M and $11.8M respectively. Virgin continued to produce profits of $60.1M in 2015 and $340.5M in 2016 (TransStats, 2016). To illustrate the recent financial performance, the net income and operating revenue is shown below. Other metrics such as passengers, flights, RPM, ASM, and LF will also be …show more content…

The percentage of passengers has increased over 10% through the previous four years. The number of flights has stayed relatively stable with a slight decrease. Revenue Passenger Miles has had a 15% increase. Available Seat Miles has had a 1.4% increase. And the Load Factor has increased by nearly 3%. This data displays a company that has just grown through its infancy and is becoming more relevant in the market. Much of the success of this airline can be attributed to its ability to develop a loyal customer base and successful branding

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