Virgin America says leasing its planes to others
WASHINGTON (Reuters) – Virgin America, the fledgling airline with ties to entrepreneur Richard Branson, has begun leasing Airbus A320s to others to generate revenue as it struggles to win permission from the U.S. government to operate, its chief executive said on Friday. Fred Reid told reporters after a speech to an industry group that the company has finalised two leases with a U.S. start-up airline and is in the process of negotiating two more leases with a foreign carrier he would not name.
Reid said the leases were short-term in case Virgin America needed to take the planes back for its own operations.
He would not discuss lease terms but industry officials said Virgin America’s brand-new planes were probably worth millions in monthly lease fees.
Virgin America has now taken delivery of 11 Airbus (Paris: NL0000235190 – news) aircraft for its San Francisco-based operation that sought U.S. Transportation Department approval to operate 15 months ago. The government tentatively denied operating authority in late December, finding that Virgin America’s ownership structure did not satisfy federal law that limits foreign investment in U.S. airlines.
Regulators were particularly concerned about Virgin America’s ties to Branson’s Virgin Group
Reid, who has stressed all along that Virgin America would be solely under the control of American investors and management, said he would step down if it would clear the way for government approval. The company has made other ownership and investment concessions to satisfy regulators.
The U.S. Transportation Department could make a final decision within weeks.
Some major U.S. airlines have opposed Virgin America’s application, as have labour unions who fear that foreign control of a U.S. airline could undermine their jobs.
“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.
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