F9niner

Virgin America

Virgin America Cleared for Take-Off in 2010

U.S. Airline Applauds DOT Decision Reaffirming Fitness and Citizenship

• Press Release Source: Virgin America On Friday January 8, 2010, 12:45 pm

SAN FRANCISCO, Jan. 8 /PRNewswire/ -- Virgin America, a privately-held domestic airline, today applauded the Department of Transportation's (DOT) decision confirming the carrier's financial fitness and U.S. citizenship status. Earlier today, the DOT issued a ruling that the airline and its proposed new ownership structure will remain fully compliant with U.S. ownership laws. U.S. law requires that domestic airlines remain under the control of U.S. citizens, with no more than 25% of the voting stock being held by foreign citizens. As a matter of policy, the DOT reviews any proposed ownership changes of over 10 percent of the voting stock of any U.S.-domiciled airline.


(Logo: http://www.newscom.com/cgi-bin/prnh/...GINAMERICALOGO)


"Today is a great day for airline competition, for our traveling guests and for our teammates," said Virgin America President and CEO David Cush. "We're extremely pleased with the Department of Transportation's announcement. With this behind us, we intend to focus on what we do best: injecting new competition into markets as we grow, creating new jobs and delivering an unrivalled guest experience."


The proposed new ownership structure will reflect a change among Virgin America's U.S. investors and also allow the Company's teammates to participate in the airline's future via an Employee LLC. Under the new structure, the airline's voting stock will remain in its previous configuration with 75 percent held by the U.S.-based VAI Partners, LLC and 25 percent held by Virgin Group. However, the U.S. investors comprising VAI Partners will change with the following entities now comprising the VAI stake:

• Cyrus Aviation Investor, LLC – 55.5 percent
• VAI MBO Investors, LLC—27.8 percent
• VX Employee Holdings, LLC—16.7 percent
• VAI Management, LLC—less than 1 percent

Cyrus Aviation Investor, LLC is an entity related to long-time Virgin America investor, Cyrus Capital. Under the new structure it will substantially increase its investment to become the airline's principal U.S. investor.


VAI MBO Investors, LLC is comprised of five individual investors. Four of the investors, Don Carty, Sam Skinner, Cyrus Freidheim, and David Cush, are current Virgin America Board members, and a fifth, Robert Nickell, will assume a Board seat at the closing of this transaction.


VX Employee Holdings, LLC is an entity established to hold the economic value of 16.7 percent of VAI for distribution to the employees of Virgin America at the time of a qualified liquidity event, such as an initial public offering.


"Given that our success to date is due to the efforts of this entrepreneurial start-up team, we are pleased that our teammates will now have a stake in the financial success of our airline," added Cush.


As part of the proposed transaction, Virgin America will obtain an additional $68.4 million in unsecured debt from its shareholders. This facility will further improve the liquidity of the company, positioning it for additional growth in 2010 and beyond.


The company will continue to have a U.S. controlled Board of Directors (with seven of nine seats held by U.S. citizens). Although a privately-held company, the airline is announcing these details given DOT's public ruling earlier today.


Since its August 2007 launch, the San Francisco-based Virgin America has created more than 1500 new jobs, swept all the major reader-based travel awards, and lowered fares and improved service in the new markets it has entered. The start-up airline's most recently reported financial results included the announcement of its first quarterly operating profit, a year-over-year revenue increase of 38 percent, record load factors and improved unit costs for the third quarter of 2009.


Virgin America flies to San Francisco, Los Angeles, New York, Washington D.C., Seattle, Las Vegas, San Diego, Boston, Orange County and Fort Lauderdale. Virgin America has flown over 6.2 million guests since its inaugural flights and now counts over 1.2 million Elevate loyalty program members. In just over two years flying, Virgin America has captured a list of travel industry best-in-class awards, including "Best Domestic Airline" in the Conde Nast Traveler Readers' Choice Awards and in Travel + Leisure's World's Best Awards.

beech1980

whats the junior base sfo or jfk? whats the general consensus about this airline as far as work rules, fellow employees, management, pay and benifits? is it going be one of the up and coming start ups, or a airline that people are ashamed to work at? ie; its a pay check. any feedback would be great, good or bad. thanks

shiznit

You should be very ashamed to work there. Nonexistent work rules, pay that lags peers by a long shot, and you don't keep "pay longevity" when you change from FO to CA so you take yet another hit. Companies run by Branson are notoriously anti-union and anti-labor, they rely on people wanting to work there for the "cool" factor, and once it wears off you are too senior to want to start over so you get stuck there as an indentured servant.

Buyer beware at VX.

Eric Stratton

I think that has since changed.

hockeypilot44

I have nothing against the Virgin American employees. Everyone know the company is foreign owned though. This just goes to show you that the government will not shut down ANY airline. They want their cheap tickets and will not remove competition. I look for this to pave the way for more foreign airlines someday.

Fred Flintstone

CA upgrades retain longevity. That was fixed over a year ago.

Pay is low. We are trying to fix that. Owning 16.7% of the company will help somewhat, but the hourly does need to improve. OTOH, with the job market being so dismal right now I can see this as an uphill fight. Maybe when the other airlines join us in hiring it will be better for all.

And hockeypilot44, the DOT just ruled on our ownership meeting the rules, with about a year of intense lawyer antics by our friends up north. If that type of proctoscopic exam isn't enough for you, you will just have to put fresh tin foil in your hat. It really doesn't matter, as the world will end in 2012 anyway.

Now about the black shirts... well, I like no tie!

johnso29

Well that is nice! And be glad you're flying A320's. Could you imagine a black uniform in the summer in a DC9!

1flyguy

Hey Mr. Flintstone,

You make it sound like Alaska had no basis for their petition. Let's look at some facts and talk about lawyer "antics."

First, VX is denied their original start-up date by the DOT. Why? Well, the government wasn't real comfortable with their ownership make up. So after a couple of magic changes (on paper) they were eventually allowed to start operations about a year after they had originally planned. Probably Alaska's fault huh?

Next, VX doesn't want to disclose their financial data to the DOT as every other U.S. operator is required to do. The DOT (finally) denies their claim and orders VX to make their financial data public. But wait, VX doesn't feel they should have to because it would be a disadvantage to them due to the fact that competitors could use the data to try to gain market share from them. And even though the DOT gave their ruling once, thanks to those fancy "lawyer antics," VX appeals the DOT's original decision. This gets locked up in the halls of the DOT for another 8 months until they finally deny VX's appeal. Alaska's fault of course.

Next comes some fairly reliable rumors that a couple of VX's investors have cashed in on their investment. Obviously, if true, this would put VX's ownership status into question. Based on those facts Alaska petitioned the DOT to ensure VX was in compliance with U.S. law. The DOT sits on the info for a long period and does nothing. So, Alaska petitions the DOT again, along with a few labor unions, and even a couple of skeptical politicians voiced their concern. Now after a lengthy process the DOT finally comes out and says, "why yes VX is indeed compliant with the U.S. ownership rules." Of course, VX did make some changes just to be sure. Out of curiosity though, why isn't one of the original investors listed in the new ownership structure? You know, the one that the rumors were about. And when did the BOD decide to invest more? I didn't see that anywhere before. Now we find out that the VX employees actually own a stake? Again, I didn't see that listed anywhere previously. I mean, before the DOT's ruling did you know you owned 16.7% of the company? Cool news huh? Congrats.

So you can pretend that it was all "lawyer antics from your friends up north." But I think it is safe to say that the DOT met with the folks from VX behind closed doors and told them they needed to restructure their ownership. The DOT certainly doesn't want to shut anyone down and put more people on the street in this economy and job market. Would Alaska love it if VX had to shut the doors? Absolutely! But they also have a right to make sure that one of their main competitors is playing by the same rules that everyone is required to play by.

I realize that you are an employee of VX and I don't blame you one bit for supporting your company. However, try to be a little realistic. There were some serious questions regarding the ownership of your airline. There is a lot of debate out there on the merits of current U.S. ownership laws. But for right now, it's the law.

tzskipper

Sorry I could not paste the letter from the DOT, but this info should help clarify the process the DOT went through to answer those with concerns... Found through the DOT website.

http://ostpxweb.dot.gov/aviation/bus...%20Letter.html

S

brianb

Don't believe anything out of this guy's mouth. His lack of knowledge is astounding and unfounded and just plain "wrong".