Richard Branson’s “boutique airline” Virgin America apparently is for sale.
Psssst. Hey, you … yeah, you. … Wanna buy an airline?
If any of our readers have a couple of hundred million lying around or have figured out the next winning Powerball numbers, this might be for you. The word on the street is that Virgin America, Inc., is for sale.
The airline started service in this country in 2007, flying out of San Francisco. It’s owned by British billionaire Richard Branson.
Virginia America went public 18 months ago. After nearly a decade of operating at a deficit, Virginia made money in 2015 but a 0.01 percent net profit margin is paper thin. Airlines had increased profits – most of which were much larger than Virgin America’s – because of lower fuel prices. If oil prices rise (which we all know they will at some point), will Virgin’s profit margin disappear.
News of a possible sale sent the airlines stock prices up nearly 13 percent. Which is good news for stock holders.
Virgin America is a boutique carrier.
“The American airline system, 10 years ago, didn’t have a decent airline, so I thought let’s launch Virgin America,” Branson said in an interview with Bloomberg TV last week. “We attract both leisure people and tech people who want to be flown in a slightly more hip airline than our competitors.”
The possible sale of Virgin comes at an interesting time in the airline industry. It has solidified with four major carriers who try and provide the best service their bottom line provides. And there are a few low-fare carriers who charge for luggage and other amenities.
With a high-tone first class, plenty of leg room in premium coach and above-average accommodations in coach, Virgin America flights appeal to the young hip. It’s particularly popular with the young tech Turks and other millennials who fly between San Francisco and Los Angeles and out of New York.
There’s a good chance that another airline – Delta or JetBlue – will gobble up Virgin America to access its routes and gates. Because of its business model, it appears unlikely that Virgin America will be bought by a company that will continue the current operation.