Kansas City, MO—Vanguard Airlines, Inc. (“Vanguard” or the “Company”) (OTC: VNGD) announced third-quarter results today which reflect the Company`s most profitable quarter in its history and a continued turnaround in financial performance.
The Company`s operating profit for the three months ended September 30, 1998 was approximately $4.1 million, compared to an operating loss of $5.8 million in the third quarter of 1997. The Company`s net profit for the three months ended September 30, 1998 was approximately $3.4 million or basic earnings per share of $0.05, compared to a net loss of approximately $6.6 million or basic loss per share of $0.43 in the third quarter of 1997. The 1998 third-quarter net profit includes a non-operating expense of approximately $0.8 million related to a non-cash charge for deferred debt issuance expense, compared to $0.6 million in the third quarter of 1997. In addition, the Company generated more than $5.8 million in positive cash flow from operations in the three months ended September 30, 1998.
Total operating revenues for the three months ended September 30, 1998, increased approximately 66% to $32.2 million compared to $19.3 million in third-quarter 1997. Total operating expenses for the three months ended September 30, 1998, increased approximately 12% to $28.1 million from $25.1 million in the third quarter of 1997. Yield for the third quarter of 1998 increased approximately 57% to 16.0 cents compared to 10.2 cents in the third quarter of 1997. Load factor increased 12.3 points to 71.7% in the third quarter of 1998 compared to 59.4% in the same period in 1997. Breakeven load factor decreased 15.3 points to 63.8% in the third quarter of 1998 compared to 79.1% in the same period in 1997.
Robert J. “Rocky” Spane, CEO and President of Vanguard Airlines, said, “After reporting our first-ever profitable quarter and a 4% operating margin for the second quarter of 1998, we are delighted to report a 13% operating margin this quarter. While we benefited from a strike at one of our competitors for about two weeks in September, we believe that it only accounted for about one-third of our profit in the third quarter.
Unless we see an increase in predatory behavior by the major airlines, we expect to finish 1998 with a modest operating profit, compared to a $25 million operating loss last year. Furthermore, the Company`s balance sheet has vastly improved, particularly with regard to increases in available cash balances and stockholders` equity and decreases in notes and accounts payable. With two consecutive quarters of profitability behind us, and the likelihood of another in the fourth quarter, a traditionally weak period for airlines, we believe that Vanguard`s turnaround is complete.”
Mr. Spane added, “Now that Vanguard is in a better financial position, we intend to expand the airline in a pragmatic manner. We are engaged in active negotiations to obtain a couple of matched fleets of used Boeing 737-200 aircraft for staggered delivery over the next two years. We anticipate that some of the aircraft delivered over the next 12 months will replace older versions in our fleet. In the meantime, we are close to completing negotiations with a major lessor for the delivery of at least two aircraft in early 1999.”
Mr. Spane concluded, “In keeping with our strategy of offering low fares, adequate frequency and better-than-expected service in large markets not served by Southwest Airlines, we have identified numerous niche opportunities for growth. We continue to see strong demand in the domestic marketplace, particularly from price sensitive, small- to medium-sized businesses, and we intend to add flight frequencies to existing markets, plus open new markets, specifically with them in mind.”
Vanguard Airlines, which began service in December 1994 and is headquartered in Kansas City, is a low-fare, passenger airline providing convenient, scheduled jet service. Vanguard serves the following eight cities: Atlanta, Chicago-Midway, Dallas/Ft. Worth, Denver, Kansas City, Minneapolis/St. Paul, Myrtle Beach and Pittsburgh. The Company employs approximately 800 full-time equivalent employees and currently operates a fleet of nine Boeing 737-200`s.
This press release contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements are made based on management`s belief, as well as assumptions made by, and information currently available to, management pursuant to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. The Company`s actual results may differ significantly from those currently anticipated. Factors that may cause such differences include, but are not limited to, general economic conditions, the cost of jet fuel, the Company`s ability to secure additional financing, the occurrence of events involving other low-fare carriers, potential changes in government regulation of airlines or aircraft, aircraft availability and delivery issues, and actions taken by other airlines, particularly with respect to scheduling and pricing in the Company`s current or future routes.