Can Virgin America Spin Branding Gold Into Lasting Value?

The low-cost airline posts profits and eyes an IPO. But can it maintain its affordability?

Known for its groovy, LED-lit interiors, its in-flight Wi-Fi, and entertainment channels, its unabashed courting of social media "influencers," and its green policies, Virgin America has been the hip low-cost carrier of choice for six years now, ferrying the cool people coast to coast from JFK to SFO to LAX. Even its safety videos are hip. But what Virgin hasn't been able to do until now is post consistent profits; in fact it's lost $600 million of Richard Branson's money since the brash billionaire founded it in 2007.

That may be changing. Virgin just posted its first ever consecutive profitable quarter, and CEO David Cush says it's on track to be in the black for 2013. That would put the company in position to stage an IPO early next year. Virgin's path to profitability hasn't been jet science. It raised fares slightly and cut back on the schedule with a goal of flying fuller planes. Year over year, revenue per seat mile was up 4.5% last month.

The question: Can Virgin America can become a publicly traded, consistently profitable airline while retaining its cherished place as a boutique, yet budget favorite? What often happens in this situation is the "budget" bit goes out the window. Rival JetBlue, for example, has been going increasingly upscale, introducing business class "suite seats" and "Mint" first-class cabins on long-haul flights. Will Virgin pursue a similar strategy to eke more cash per mile traveled?

[Image: Virgin America]

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2 Comments

  • Seebohm

    Unfortunately, Virgin America might be moving toward profitability by reducing service to customers. Worst employee attitude in the business! It's a JetBlue opportunity.