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.
"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.
EDITORS NOTE: Virgin America is a U.S.-controlled, owned and operated airline. It is an entirely separate company from Virgin Atlantic. Sir Richard Branson's Virgin Group is a minority share investor in Virgin America.
About Virgin America: Headquartered in California and launched in August 2007, Virgin America is one of the fastest growing start-up U.S. airlines of all time and currently employs over 1500 people. Virgin America offers guests attractive fares and a host of innovative features aimed at reinventing air travel. The airline's base of operations is San Francisco International Airport's modern International Terminal. The airline's new aircraft offer interactive in-flight entertainment systems and power outlets near every seat for electronic gear. Virgin America offers in-flight internet service on every flight and hosts the largest in-flight entertainment library in the U.S. skies via its touch-screen Red(TM) seatback system. In just two years flying, the airline was named "Best Domestic Airline" in the Conde Nast Traveler 2008 and 2009 Readers' Choice Awards and in Travel + Leisure's 2008 and 2009 World's Best Awards. For more please visit: www.virginamerica.com
SOURCE Virgin America