Virgin America unveils first aircraft: A320

[Pieter C. 5]

Virgin America unveiled its first aircraft, an A320 named Jefferson Airplane, yesterday in San Francisco in a ceremony attended by California Gov. Arnold Schwarzenegger. The startup, which has leased 34 A320s, still has not received a go-ahead from US authorities while potential US competitors challenge its citizenship, claiming that real control rests with Richard Branson's Virgin Group, not US investors. The unveiling indicated the carrier is "ready, willing and able to fly," CEO Fred Reid told reporters in attendance. DOT is expected to issue a ruling in January.

[S V Choong 4]

Thats really brave...... the unveil of the a/c as a protest or pressure to the DOT perhaps?

[Sandeep G 1]

meanwhile, where are these planes gonna be? Do they even have any registration? can you register an aircraft to an airline that does not ave an AOC? - i'm thinking not....

 

Another example of bureaucracy rearing it's ugly head! Foreign ownership is a contentuous issue in all countries, but I wouldn't have thought it would be that big a deal in the USA.

[Pieter C. 5]

meanwhile, where are these planes gonna be? Do they even have any registration? can you register an aircraft to an airline that does not ave an AOC? - i'm thinking not....

 

AFAIK they're sold to GECAS and leased to AFS investments Stanford/CT; a few are parked at YUL in full Virgin America colours, waiting for delivery...one of them is c/n 2830.

[Pieter C. 5]

More Virgin America news: guess, it's not good

 

Virgin America Expects US To Deny Right To Fly

 

December 23, 2006

Virgin America, a low-cost airline with a name made famous by British entrepreneur Richard Branson, expects the US government to reject its application to start flying, a spokeswoman said.

 

The company announced earlier on Friday that it had completed the last formal step in the US Federal Aviation Administration's airline certification review and only needed approval from the Department of Transportation.

 

The spokeswoman declined to elaborate, but Virgin America has faced opposition from US carriers such as Continental Airlines who argue that Branson's Virgin Group effectively controls the airline in violation of US law.

 

The law prohibits a foreign equity stake of more than 25 percent in a US airline.

 

British-based Virgin Group, which has stakes in airlines in Europe, Australia and Nigeria, holds a 25 percent stake in the company, lends the airline its brand and has promised to provide financing.

 

Virgin America says it is controlled by US citizens and conforms with US law and that rival airlines are using the foreign control argument to limit competition.

 

The airline said earlier that it planned to enter the market armed with USD$177.3 million in start-up capital.

 

Much of that financing came from VAI Partners, an investment group funded by private equity firms Black Canyon Capital and Cyrus Capital Partners.

 

The company had 33 Airbus planes on order and was planning to start operation with just two to four aircraft once it was allowed to fly.

 

The airline intended to first fly between San Francisco and New York, hoping to grow to 20 routes in two years.

 

(Reuters)

 

[Pieter C. 5]

Indeed.......

US Rejects Virgin America Operating Certificate

 

December 27, 2006

US transport regulators said on Wednesday they had tentatively rejected Virgin America's application to fly, saying its ownership structure did not meet a US citizenship test.

 

The US Department of Transportation said the low-cost airline, with a name made famous by British entrepreneur Richard Branson, did not meet the requirement that 75 percent of its voting interest be owned or controlled by US citizens.

 

Virgin America said it would respond to the department on January 10 and demonstrate that it will meet the ownership and control requirements.

 

"We remain committed to getting our wings," said Virgin America in a statement. The airline had said last week it was expecting the rejection.

 

Virgin America has faced opposition from US carriers such as Continental Airlines, who argue that Branson's Virgin Group effectively controls the airline in violation of US law.

 

In rejecting the application for an operating certificate, the department cited Virgin Group's and its executives' pervasive involvement in the creation of Virgin America.

 

It also cited the funding Virgin Group provided to the carrier, various interlocking financial agreements, and Virgin Group's ability to influence decisions of the carrier's board.

 

The department added that the restrictive name-brand licensing agreement between Virgin Group and the airline impedes the carrier's independent, decision-making authority.

 

"...properly structured licensing or franchise agreements between US and international carriers are now, and will continue to be, permissible," the department said in a statement.

 

British-based Virgin Group has stakes in airlines in Europe, Australia and Nigeria.

 

Virgin America has 33 Airbus planes on order and was planning to start operation with two to four aircraft, beginning with a San Francisco-New York service.

 

(Reuters)

 

Wonder, what will happen to these ordered A320's

 

[Sri Ramani K. 0]

can't they like hop to malaysia and register here and get rights to fly here and make money here?

[Isaac 0]

can't they like hop to malaysia and register here and get rights to fly here and make money here?

They will face the exact same problem.

 

[Seth K 3]

Poor baby airline, what can you do....meet the 75% or give the bus to the needy......

Edited December 28, 2006 by Seth K

[Sri Ramani K. 0]

The US Department of Transportation said the low-cost airline, with a name made famous by British entrepreneur Richard Branson, did not meet the requirement that 75 percent of its voting interest be owned or controlled by US citizens.

 

just wondering..does this rule apply all over the world where 75% of stakes should be owned by the citizen? or is it just in the US? sorry still new to aviation..

[Mulyadir Fitri 0]

just wondering..does this rule apply all over the world where 75% of stakes should be owned by the citizen? or is it just in the US? sorry still new to aviation..

 

In Malaysia,it's at least 51%. The same goes to Thailand.

[Sri Ramani K. 0]

In Malaysia,it's at least 51%. The same goes to Thailand.

 

thanks..that certainly helps..cheers!

[Guest Fendy]

give the bus to the needy......

agreed. gimme gimme gimme.

[Pieter C. 5]

Virgin America Seeks US Flight Approval

 

January 18, 2007

Virgin America revised its ownership application on Wednesday, hoping to reverse a tentative decision by US regulators to deny its bid to start low-cost airline service this year.

 

The company, with branding and financial ties to Richard Branson's Virgin Group, has made significant changes to its original proposal, which the US Transportation Department rejected on December 27.

 

Transportation planners determined Virgin America failed to satisfy a long-standing federal law that limits foreign participation in US airlines. Carriers must be controlled by US citizens and overseas equity is restricted to 25 percent of voting stock.

 

Regulators found Virgin America had too much financing from entities based in the Cayman Islands and foreign limited partnerships.

 

Virgin America has agreed that its US-based investment funds, Cyrus Capital Partners and Black Canyon Capital, will limit investors to US citizens only. American investors have also pledged another USD$20 million.

 

Regulators had also cited the pervasive involvement of Virgin Group and its executives in the creation of Virgin America, and found the new carrier would probably be controlled by Branson and his interests.

 

Virgin Group committed USD$88.4 million in debt and equity financing -- slightly less than one-half of the San Francisco-based company's total start-up financing of USD$177.3 million. The debt agreements show Virgin America's survival is contingent on Virgin Group financing, the Transportation Department said in its December finding.

 

In response, Virgin Group has agreed to "clarify and relax" certain items in its trademark licence to "demonstrate how Virgin America is free to fly with our without the Virgin brand name."

 

Virgin Group also proposed to give up a board seat and relinquish veto or consent rights regarding some aspects of Virgin America's operations. Virgin Group would hold two of eight seats with voting rights.

 

Virgin Group would also place its voting shares in a trust with a trustee approved by the Transportation Department.

 

Virgin America said it would also remove its chief executive, veteran airline executive Fred Reid, if the Transportation Department finds that necessary.

 

(Reuters)

 

[Pieter C. 5]

Virgin America announced that former US Secretary of Transportation and White House Chief of Staff Samuel Skinner will be vice chairman, which CEO Fred Reid said should "continue to demonstrate our compliance with the Department [of Transportation]'s citizenship requirements".

 

The carrier also said that pending DOT certification, it intends to serve New York JFK, Washington Dulles, Los Angeles, San Diego and Las Vegas within nine months of launch. It is based in San Francisco. It intends to fly to 10 destinations in its first year and up to 30 within five years.

 

[Edwin P K 0]

www.letvafly.com today! :wub: :wub:

[Mohd Idham 0]

The 'other' airline I love the most is Virgin....number two after MH la....

[Pieter C. 5]

Virgin America Leasing Some Planes To Others

 

February 23, 2007

Virgin America, the fledgling airline with ties to entrepreneur Richard Branson, has begun leasing Airbus A320s to others to generate revenue as it struggles to win permission from the US government to operate, its chief executive said on Friday.

 

Fred Reid told reporters after a speech to an industry group that the company has finalized two leases with a US start-up airline and is in the process of negotiating two more leases with a foreign carrier he would not name.

 

Reid said the leases were short-term in case Virgin America needed to take the planes back for its own operations.

 

He would not discuss lease terms but industry officials said Virgin America's brand-new planes were probably worth millions in monthly lease fees.

 

Virgin America has now taken delivery of 11 Airbus aircraft for its San Francisco-based operation that sought US Transportation Department approval to operate 15 months ago. The government tentatively denied operating authority in late December, finding that Virgin America's ownership structure did not satisfy federal law that limits foreign investment in US airlines.

 

Regulators were particularly concerned about Virgin America's ties to Branson's Virgin Group, which runs Virgin Atlantic Airways and has provided some financing and branding rights to the US entrant.

 

Reid, who has stressed all along that Virgin America would be solely under the control of American investors and management, said he would step down if it would clear the way for government approval. The company has made other ownership and investment concessions to satisfy regulators.

 

The US Transportation Department could make a final decision within weeks.

 

Some major US airlines have opposed Virgin America's application, as have unions who fear that foreign control of a US airline could undermine their jobs.

 

"The patience and the tenacity of our investors is legendary. They are not willing to give up. It is too good of an idea. We've come too far to stop," Reid said.

 

(Reuters)

 

[Pieter C. 5]

You guys might see Virgin America planes in the US afterall :

 

DOT tentatively approves Virgin America, but CEO Reid must go

 

Wednesday March 21, 2007

US Dept. of Transportation yesterday tentatively approved Virgin America's plan to "reconfigure its ownership and management structure" and said the carrier could earn its operating certificate if it meets certain conditions, including replacing CEO Fred Reid, who has overseen the certification process since he left Delta Air Lines in April 2004.

 

DOT said VA's revised plan, filed after rejection of the original application on grounds that the airline was not clearly owned and controlled by US citizens and was influenced unduly by minority investor Virgin Group, "puts it back on track to meet strict US citizenship tests." The retooled application "should meet US ownership rules provided the company fully executes the proposed changes to its original plan." Among those changes is the ouster of Reid, formerly president and COO of Delta, who DOT said has "longstanding association with foreign investors [that] raised concerns about who would control the new carrier."

 

San Francisco-based Virgin America said it "welcomes" the tentative ruling and plans a midsummer launch but did not promise it will meet all conditions. "We plan to meet with our shareholders immediately to address the Department's proposed conditions," Reid said.

 

Those conditions, DOT said, include "removing the Virgin Group's veto power over certain contracts and expenditures, amending the company's loan agreements with the Virgin Group, restructuring its board of directors to reduce the number of foreign representatives, revising its trademark license to ensure that the US carrier can operate independently of UK-based Virgin Atlantic, and establishing a voting trust to administer the Virgin Group's equity interest in the airline." Virgin Group owns a 25% stake in VA.

 

US airlines are expected to file objections to yesterday's ruling. DOT's decision comes shortly after US and EU negotiators reached a tentative agreement on an open skies deal that seeks to ease US airline ownership, franchising and branding rules