Virgin To Be Denied?

[eolesen]

In our government, money talks.

If that were the case, then VX should have been approved.

I don't have any numbers handy, but it was said that they've spent twice as much in the startup phase as Jetblue did. I'm not just talking about lobbyists or lawyers, either.

Hiring people like Fred Reid from DL and Don Carty didn't come cheap, and they chose to take delivery of eight aircraft they couldn't operate, and keep a hundred or more people on payroll for the past 15 months doing nothing.

All of that without a single dollar of revenue coming in?...

So yes, money talks. And in this case, it told the DOT and others that there were deeper pockets behind this startup than were disclosed in their filing.

 

[oldiebutgoody]

If that were the case, then VX should have been approved.

I don't have any numbers handy, but it was said that they've spent twice as much in the startup phase as Jetblue did. I'm not just talking about lobbyists or lawyers, either.

Hiring people like Fred Reid from DL and Don Carty didn't come cheap, and they chose to take delivery of eight aircraft they couldn't operate, and keep a hundred or more people on payroll for the past 15 months doing nothing.

All of that without a single dollar of revenue coming in?...

So yes, money talks. And in this case, it told the DOT and others that there were deeper pockets behind this startup than were disclosed in their filing.

Still don't buy it. There's ABSOLUTELY no way they spent more lobbying for approval than the rest of the industry spent against it.

Let's see....
Donald Carty, FIRED from AMR

Fred Reid, about to get his walking papers from DL (yes, he had just been "passed over" for the CEO job). Claim to fame was starting SONG airline, part of the reason DL landed in chapter 11.

They've really picked a team of winners there. Seems to me the thing they're the best at is making their resumes look good.

I agree, it appears that funding in the case of VA is very suspect, and this is a good call by the government if they want to maintain the 25% rule, but even the attitudes toward that are changing.

I don't see how an airline can start up with 2-4 airplanes on the scale that Virgin is proposing without very deep pockets involved somewhere. If they aren't US pockets, then the gov't made the correct call!

 

[eolesen]

If their financing is indeed as Enronesque as the denial order appears to be, I don't know that the rest of the industry really had to lobby that hard against it.

Still, it's all a moot point now. In a couple years, they will be but a distant memory in the annals of aviation startups gone bad...

 

[Flying Titan]

Looks like Virgin America may have a new lease on life. Here's today's DOT news release...

Virgin America Can Meet U.S. Citizenship Test, DOT Tentatively Concludes Based on Substantially Revised Application

Virgin America’s plan to significantly reconfigure its ownership and management structure puts it back on track to meet strict U.S. citizenship tests under federal law, the U.S. Department of Transportation today tentatively found.

The tentative decision does not change current U.S. airline investment law or its application.
After a previous ruling on Dec. 27 found that Virgin America’s original application failed the citizenship tests outlined in law, the company filed a largely revised plan. That revised application, the Department has now tentatively found, should meet U.S. ownership rules provided the company fully executes the proposed changes to its original plan.

The Department also imposed other conditions on Virgin America, which the carrier would have to meet before obtaining final approval. These conditions include completing required organizational changes, amending various agreements, and providing advance notice to the Department should the carrier get additional loans from the non-U.S.-based investors.

In its revisions to the original filing, Virgin America offered to replace its current chief executive officer, whose longstanding association with foreign investors had raised concerns about who would control the new carrier. The company proposed other reforms to bolster the U.S. applicant’s independence from U.K. investors, including 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 U.S. carrier can operate independently of U.K.-based Virgin Atlantic, and establishing a voting trust to administer the Virgin Groups' equity interest in the airline.

Under the Federal Aviation Act, to be certificated as a U.S. airline, a company must first show that it is actually controlled by U.S. citizens, that the president and two-thirds of the board of directors are U.S. citizens, and that at least 75 percent of the voting interest is owned or controlled by U.S. citizens.

Interested parties may file an objection to the proposed decision within 21 calendar days. Answers to objections will be due seven business days afterward. The show-cause order and other documents in the case may be found at http://dms.dot.gov, docket OST-2005-23307.

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