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What's Next For Virgin America?

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  • Description

    Virgin America CEO David Cush weighs in on the state of business.

  • Duration 4:59
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Income OK well virgin America reporting third quarter operating profit and is watching revenues rise 27%.

Over last year.

With an IPO on the rise -- may -- in about -- -- -- so what is next for the domestic airline.

That's how we got the numbers because they eventually gonna go public they're now revealing their inside numbers so let's bring in the CEO and president of virgin America and David crash.

He joins us now and David we've.

We watched the same time you did I was just talking with sir Richard Branson.

Of the parent company of virgin group -- what about this that it was 2007 when you guys launched an end your success we kept saying is as of as well if they do we want fox business and you just as well.

And you look at how well you have done you know fly to fifteen cities in the US and Mexico and you've really become a player.

Up what the strongest area of your business right out a -- people are checking their wallets their pocketbooks and saying I can't take this trip -- -- take this one but at a discount.

What we're we're seeing lots of -- still on the trans con markets you know Doug JFK market is is is quite strong.

Our -- -- a strong from both LA and from San Francisco and we're seeing quite stable demand on the business side.

Were little bit -- about leisure as ticket prices go up to compensate for fuel or keeping a close eye on that.

Let's talk about style and brand because they always very important any virgin product anything that has the virgin name in it.

How would you first -- some people say that you were kind of you -- to airlines what apple is to technology you have that that kind of new -- style how would you define your brand.

What you know the -- brands have always had a very strong eye toward on toward designed.

And you know that the feeling and virgin is everything doesn't have to be totally utilitarian that it can actually look good.

And feel good and everything else as well as providing what the benefit as of the products so.

God that's when you look at our cabin that's really what a lot of the focus was was it doesn't have to be just Spartan that actually you can have been a pleasant environment pleasing to the guy.

And that's what we've done.

He's talking about the pink lights books OK would you get on the virgin America -- to get the pink light said that you get that funky music I mean it's it's it is absolutely pleasant experience once you get on but other.

What's happening you guys are canceling some aircraft orders you cancel the Boeing order your canceling twenty -- you're thirty Airbus orders why.

What we you know we had a look at an earlier this summer and we were looking at some significant growth coming up we've just gone through a a major growth spurred about -- 5% increase over the last couple of years.

And what we looked -- -- if you look at fuel prices where they are they look at kind of the slow economic growth the country is going through.

They're very simply we're we're gonna earn an adequate return on capital so we had a call with Airbus.

They had other customers who want to the airplanes and we just decided to pull in the -- a little bit until we get a little more clarity.

-- gas prices -- no joke for for drivers on the ground or in the air you you guys have about a 75 million dollar.

-- were unrestricted cash balance our.

How much of that.

Would be eaten up with gas prices go up even higher than they are now.

-- you know of fuel courses the largest expense for airlines right now it's about 50% of our expense we keep a close I am out what I will say is we've got.

A pretty solid hedge book going forward so we believe we would have time to react to -- free ticket prices we've got about half of our fuel over the next twelve months already had.

Already hedged -- have been it's just gets scary to see that chart we look like we're heading sort of back up to at least closer to the bottom of the territory 2008 when it was just.

Really tough United Airlines and Fox Business broke the story yesterday suffered a terrible computer glitch that grounded many of their jets if not all of them at least.

Stateside my question to you is how -- how do you ensure over virgin America that that doesn't happen to you guys I know you're on a smaller scale but nonetheless.

Well you know that that's the thing about airlines is it's a huge logistical off puzzle every day and we -- system didn't go down for an -- to.

Takes a long -- -- put them back together so we've got.

Many levels of redundancy not only in the computer systems themselves but also in the telecommunications networks and not.

You know sometimes it all goes wrong -- not that's what happened to united and we hope it doesn't happen to us finally David long term plans everybody wants know -- the CI PO for virgin America is -- gonna happen at the end of 2013.

Is -- on indefinite -- -- what.

Well it's not on indefinite hold you know we're gonna wait and see what the -- what the market looks like as we get to the end of 2013.

A big part of this deferral was also about keeping the balance sheet on leveraged to release less leveraged and it would be with you order so.

You know it's about keeping the balance sheet strong it's about.

That are operating profits and then we'll see which when he thirteen and when he fourteen -- Well folks if -- stuck on a tarmac somewhere frankly one of the few planes I wouldn't mind being stuck yeah.

-- virgin America plant it's it is a great experience to be insider David wonderful to have you here.

Good talking you folks thanks a million a -- through it the -- -- food is on the gas.

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