US Will Approve Virgin America If Changes Made

March 21, 2007

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Virgin America, the low-cost start-up airline with ties to entrepreneur Richard Branson, will have to ditch its chief executive and take other steps to win final government approval to operate, US officials said on Tuesday.

The Transportation Department said the company would satisfy a law requiring domestic airlines be controlled by US citizens, a sticking point that led the agency in December to reject Virgin America's application unless major changes were made to its ownership and management structure.

Virgin America offered to replace its chief executive, Fred Reid, to placate regulators who raised concerns about his ties to foreign investors.

The company also said it would amend loan agreements and remove certain powers of Branson's Virgin Group; revise its trademark to ensure independence from British-based Virgin Atlantic and establish a voting trust to administer Virgin Group's equity interest in the airline.

Transportation planners said in a statement that the revised application "should meet US ownership rules provided the company fully executes the proposed changes to its original plan."

Virgin America is based in San Francisco.

(Reuters)