Advertisement
 
YOU ARE HERE: LAT HomeCollectionsAirlines

Virgin America Secures Funding

December 09, 2005|From Bloomberg News

Virgin America Inc., a U.S. airline that plans to fly under British billionaire Richard Branson's Virgin brand, said it had secured $177.3 million to begin service next year.

Half the funding is from VAI Partners, a group backed by U.S. investment firms Black Canyon Capital and Cyrus Capital Partners, Virgin America said in a filing Thursday with the Transportation Department. "Various companies" from Branson's Virgin Group will provide the rest, according to the filing.

VAI will control 75% of the airline's stock and voting interest and has designated two-thirds of Virgin America's board, the filing said. U.S. law limits foreign ownership of airlines to 25% of voting stock. Branson, 55, who controls London-based Virgin Atlantic Airways, has been seeking U.S. investors for the U.S. carrier.

The filing seeks U.S. permission to begin flights. The Transportation Department and its Federal Aviation Administration examine airline ownership, funding, safety standards and other measures before granting a certificate that lets a carrier fly.

Virgin America said in the filing that it would operate 17 jets, a combination of Airbus A319s and A320s, within a year of starting service. The carrier said it would serve "a number" of U.S. markets, including New York and San Francisco.

The company's headquarters will be in San Francisco rather than New York, where Virgin America has had its business base.

"We've been very patiently waiting for Virgin America to get their financing together," said Michael McCarron, spokesman for San Francisco International Airport. "We are still working out details of how many gates they will get, but we expect at least 2,000 jobs directly related to the airline and thousands more in local services."

The 25% foreign ownership will be held by a Virgin Group company and two British citizens, Mark Poole, deputy chief executive of Virgin Group, and Frances Farrow, chief executive of Virgin USA Inc. Non-U.S. citizens will contribute $29.8 million in equity and $58.6 million in debt, the new airline said in the filing.

VAI, which is providing the majority of equity, is co-managed by Mark Lanigan of Black Canyon in Los Angeles and Nicholas Singer of Cyrus in New York. Each of those firms will contribute slightly more than $44 million.

Lanigan, 45, is the board's chairman and along with Singer the controlling U.S. investor, the filing said. Fred Reid, 55, who retired in April 2004 as Delta Air Lines Inc. president, is Virgin America's CEO.

Branson's Virgin Group owns about 100 businesses, including airline, music and telecommunications companies.

Advertisement
Los Angeles Times Articles
|
|
|