Virgin America seeks up to $320 million in public stock offering

Since launching in 2007, Burlingame, Calif.-based Virgin America has repeatedly won awards for its service but has remained a tiny operator, competing against global carriers more than 100 times bigger.

Now, the carrier backed by billionaire Richard Branson has filed terms of its initial public offering, planning to raise up to $320 million to help expand its fleet and service area. The announcement came on the same day the airline reported its second-consecutive profitable quarter.

In its Security and Exchange Commission filing Monday, the airline said it plans to sell about 13.3 million shares at $21 to $24 each. PAR Investment Partners has agreed to purchase about $52.1 million of the shares for roughly 96% of the IPO price in a private placement.

The airline’s shares will be listed on Nasdaq under the ticker “VA.”

Branson’s Virgin Group owns about 20% of Virgin America through VX Holdings. As the IPO details were released, the English business magnate was grappling with the crash Friday of his SpaceShipTwo rocket plane, dealing a blow to his plans to take tourists into space.

The funds raised by the initial public offering will go toward “general corporate purposes” such as sales, marketing and capital expenditures, according to the filing. But the carrier also said it hopes to expand beyond the 21 markets its serves from its hubs in Los Angeles and San Francisco — even adding Hawaii to its destinations — and add to its fleet of 53 planes.

“By continuing to add destinations in select markets from Los Angeles and San Francisco, we can leverage our existing base of loyal guests and grow our share of revenue within these focus cities while also expanding our customer base,” the carrier said in its SEC filing.

Virgin America is a minor player in the U.S. airline industry, compared with American Airlines, the world’s largest carrier with more than 978 jetliners that fly to 273 airports worldwide.

But Virgin America seems to be gaining traction. For the first time since it launched, the airline reported a profitable year, in 2013, with net income of $10.1 million, compared with a loss of $145.4 million in 2012.

On Monday, the airline reported net income of $41.6 million for the three-month period that ended in September. That follows net income of $37 million in the previous quarter.

The improved performance comes at a time when the entire airline industry is reporting higher profits amid steady demand and falling fuel costs.

Last month, Virgin America was named among the “best U.S. airlines” in Conde Nast Traveler’s Reader’s Choice Awards for the seventh year in a row.

The airline has focused on attracting tech workers and entertainment executives who fly from Los Angeles and San Francisco to the East Coast on business. Virgin America has sought to set itself apart with onboard mood lighting, touch-screen entertainment systems and fleet-wide wireless Internet.

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