Virgin America Makes Progress on Costs

Earlier today, I talked about Virgin America’s poor revenue performance, but there is a silver lining. They significantly reduced their costs in the quarter.

Unit costs declined from 11.12 cents in the fourth quarter to 8.99 cents in the first quarter. That’s a big dip, though some of that benefit is thanks to the increased stage length. Regardless, it’s very good news for the airline, assuming it’s not skewed by any one-time costs.

Of course, we don’t know details regarding why costs have gone down, and we probably won’t know until the government data comes in. Even then we might not know if there were special items that led to a one-time impact, but we will be able to figure that out once we see how second quarter cost numbers come in.

So things are looking up on the cost side, but with revenue where it is and, most importantly, cash dwindling, the lower costs may not help nearly enough.