Sun, Feb 25, 2007
Airline Seeks Capital While Awaiting DOT Nod
Faced with maintaining a fleet of aircraft it can't fly,
fledgling carrier Virgin America has started to lease some of its
11 Airbus A320s to other carriers in order to generate needed
revenue.
On Friday, airline CEO Fred Reid told Reuters the airline has
finalized two leases with an unnamed US start-airline, and is
negotiating terms with a foreign carrier for two more.
Reid stressed the leases are short-term, and that Virgin America
could take the planes back if, or when, his airline is cleared to
begin US operations. Analysts say Virgin could make millions of
dollars each month from leasing the brand-new aircraft.
As Aero-News reported, Virgin
America's initial request to the Department of Transportation to
begin US service was denied, due to foreign ownership concerns.
Regulators were concerned with the airline's ties to Sir Richard
Branson's Virgin Group, which provided financing and the right to
brand the aircraft with the Virgin name.
The airline later amended its management structure to place
greater emphasis on US ownership, and resubmitted its application
to the DOT. That application is now under review.
Reid maintains Virgin America will be solely under the control
of US investors and management. The former president and COO of
Delta Air Lines also volunteered to step down, if it would clear
the way for Virgin to begin service.
"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.
Other US airlines have protested Virgin's application, saying it
sets a dangerous precedent of allowing foreign entities to exert
control over American airlines.
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