Written by Andrew Young.
Alaska Airlines has asked for a second time that the Department of Transportation look into whether Virgin American is at least 75% percent American owned as required by law to operate domestically in the United States. Two U.S. based hedge funds, Black Canyon Capital and Cyrus Capital Partners, will soon have the option to pull out of the company. Thus, making Richard Branson’s Virgin Group the majority owner, a United Kingdom based company. Branson first used the hedge companies to slip by the U.S. laws to operate domestically.
It has been reported that Virgin America has hired Lazard Group to look for possible investors for the company. The combined search for investors and the fact of Virgin America losing $227 in its first year of operations only increases the suspicions that Virgin American may be or may soon be breaking DOT law operating domestically in the U.S. while being owned more than 25% by the foreign UK based Virgin Group.
It is also interesting to note that globally most laws are the same as American. As an example, American Airlines could not operate domestically in Australia. It is thought that Alaska Airlines maybe questioning Branson’s Virgin Group because they are the main competitor for Alaskan. While this seems reasonable to believe the issue at hand is the fight for business, but the serious issue is the legality of whether Virgin American can and should be operating in the U.S. Do not get me wrong, I think the new airline appears hip and cool with good customer service, but the laws must be upheld, especially in this tough time for the airlines.
