Secures $177.3M in Committed Funding, Announces U.S. Investors

Virgin America Inc., a new U.S.-based airline start-up company, has announced that it has secured $177.3 million in committed funding led by VAI Partners LLC, an investment group funded by U.S. investment firms Black Canyon Capital and Cyrus Capital Partners. This funding transaction is among the largest of any start-up airline in U.S. history. The airline also announced that it has submitted its application for certification with the Department of Transportation (DOT) to operate as an interstate scheduled air carrier.

Effective Nov. 21, 2005, VAI Partners LLC committed a majority of the abovementioned funding, assuming majority ownership and actual control of Virgin America. The company’s newly formed Board of Directors appointed Mark Lanigan, 45, a Managing Director of Black Canyon Capital as Chairman of Virgin America and Fred Reid, 55, as Chief Executive Officer.

The Virgin group of companies headed by Sir Richard Branson (below, right), 55, committed to provide the remainder of Virgin America’s funding, assuming a minority stake in the company in accordance with federal ownership guidelines for U.S. airlines. It also entered into a trademark licensing agreement to provide its world-renowned brand name and logo to Virgin America.

With its funding complete, Virgin America is positioned to pursue its strategy of launching domestic U.S. scheduled airline service utilizing new Airbus A320 family aircraft in 2006. Consistent with the reputation of Virgin’s brand around the world, Virgin America intends to provide high-quality, innovative, creative travel experiences to guests who will appreciate its value-driven approach.

“Virgin America is delighted to complete this phase of our development,” said Reid. “Our investors share a commitment to build an innovative airline based on safe and efficient operations, low costs, outstanding guest service, and a unique level of engagement with our employees. With the proceeds of this funding, Virgin America can now pursue important initiatives such as recruiting highly talented people, initiating the U.S. DOT and FAA certification processes, and developing awareness in the marketplace.”

“We have invested in Virgin America because we are impressed with the founding team and because we believe the Virgin brand is a great fit for the U.S. market,” said Lanigan. “We see an opportunity for Virgin America to take advantage of its strong capitalization and its differentiated business model to carve a successful niche in this rapidly evolving marketplace. The airline industry plays a vital role in our economy and the successful implementation of Virgin America’s business plan will bring jobs and economic development to the markets it serves.”

With its application filed at DOT, Virgin America now enters a formal process in which the agency will determine whether Virgin America is a U.S. citizen and fit, willing and able to operate as a U.S. airline. DOT will work in parallel with the Federal Aviation Administration (FAA), which will review the airline's planned operations and equipment for safety.

“We have reviewed the DOT and FAA requirements in great detail and feel that we have a thorough and complete application,” stated Lanigan.

Virgin America had previously announced New York as its corporate headquarters and the San Francisco Bay Area as its operations base. However, the airline now will combine these and locate all current employees in the Bay Area.

“We believe that a single home base in the Bay Area will help simplify operations during the company’s intense start -up period,” said Reid. “Additionally, it will help foster better communication and reduce our overhead costs.”

FMI: www.virginamerica.com