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With Its First Profit, Virgin America Quiets Doubters

Since its 2007 launch, Virgin America has done a lot right. With leather seats, mood lighting, food-on-demand, and a state-of-the-art inflight entertainment system, the airline delivers an upgraded travel experience with a cutting-edge vibe. Its Elevate loyalty program isn’t as robust as the programs of the legacy carriers, but the expansion of the partner roster and the addition of elite perks have made the program relevant, if not a stand out.

I’ve said it before: If I were given a blank slate to design an airline from the ground up, it would look very much like Virgin America.

For all that, the airline hadn’t managed to turn a full-year profit, leading to persistent questions about the company’s business model and even its long-term survival. Those questions were put to rest, at least temporarily, with today’s release of Virgin America’s annual report for 2013.

The airline added just one Airbus A320 to its fleet during the year, resulting in a capacity increase of 2.2 percent. That was more than outstripped by an increase in demand, bumping 2013 load factor to 80.2 percent, from 79.2 percent for 2012. Cost per available seat mile increased 0.5 percent, while revenue per available seat mile was up a hefty 9.3 percent.

For the first time it its history, Virgin America turned a profit for the full year. Net income for 2013 was $10.1 million. That’s a modest profit, to be sure. But it’s an enormous swing from 2012’s $145.4 million loss. And most importantly, it could mark a turning point in Virgin America’s struggle to establish ongoing financial viability.

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