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.”