Posted by Tom on Monday, May 21, 2007
Labels: Virgin America
Richard Branson's newest airline project, Virgin America, has finally received approval last Friday from the FAA to start operations this summer. The airline, however, had to make quite a few concessions in order to recieve the OK - the chief executive, Fred Reid (an ex-Delta president), was replaced. Regulators in the US were concerned about foreign ownership (after all, Branson's Virgin Group is based in the UK), and the laws in the US state that the most that a foreign corporation can control of a US-based airline in 25%. Virgin America also has to report any loans that it recieves from the Virgin Group and that US trustees on Virgin America's board have to appoint a trustee to represent the Group's 25%. The Virgin Group also financed $88.4 million in equity financing and debt, which is just under half of the airline's overall financing amount of $177.3 million. Virgin America is planning to limit future investors to US citizens only.
The airline is planning to start services this summer from a hub at San Francisco and fly to New York-JFK with a fleet of new Airbus A319s and A320s. Later, it's planning to add Washington-Dulles, San Diego, Los Angeles, and Las Vegas. Not surprisingly, a lot of the major US carriers have tried to argue that Virgin America shouldn't be allowed to fly (for an assortment of reasons).