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Virgin America and Credit Squeeze

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Mamma

Well-known member
Joined
Mar 29, 2005
Posts
2,802
Here comes the credit squeeze......

Virgin America acts to find new investors

By Justin Baer in New York

Published: January 18 2009 20:46 | Last updated: January 18 2009 20:46

Sir Richard Branson's Virgin Group has hired Lazard to help recruit new
investors in Virgin America following concern that the fledgling US
carrier's current shareholders may move their stake back to its sister
company.

Virgin Group founded Virgin America in 2005 with a pair of domestic
funds, Black Canyon and Cyrus Capital Partners, to skirt US laws
preventing foreign entities from owning a controlling stake in an
American airline. The UK company now fears that the deepening financial
crisis could prompt the two firms to exercise an option to recall their
combined $150m investment in Virgin America in the next month --
eventually leaving Virgin Group the sole shareholder, people familiar
with the matter said.

Lazard, in an appointment from both Virgin Group and Virgin America, is
looking to line up potential replacements for Black Canyon and Cyrus,
those people said. Virgin Group would in turn transfer the firms'
*****ownership stake to new US investors once they had committed, remaining
in compliance with foreign ownership rules.

A person close to Cyrus denied the fund was facing a liquidity squeeze
and said it had not reached its decision on Virgin America, which has
enough capital to fund its growth plans through until 2011.

The San Francisco-based carrier, which operates more than 80 flights a
day to eight destinations, showed enough promise to win almost $100m in
additional capital last autumn. By comparison, the largest US carrier,
Southwest Airlines, offers more than 3,300 flights a day. Virgin America
has raised more than $400m in debt and equity since its founding.

Officials from Virgin Group, Virgin America and Cyrus declined to
comment. Black Canyon could not be reached for comment.

Virgin Group owns 49 per cent of Virgin America, including a 24 per cent
voting stake in the airline -- the maximum allowed under US laws.

Black Canyon and Cyrus hold the remaining equity, and appeared committed
to the business.

The firms have been free to exercise their option since September.

The turmoil that gripped the markets last year has only worsened,
leaving Virgin Group to assume that Black Canyon and Cyrus will put
their Virgin America stake back to raise cash.

Virgin America began service in 2007 after a protracted battle in
Washington over its rights to operate domestic flights and the company's
ties to Virgin Group.

The privately held airline petitioned US transport officials to withhold
important operational data from the public, keeping information from
rivals and fuelling rumours that it has found it difficult to lure
enough passengers to stay in business.

Robert Nisi, Cyrus's chief operating officer, told the Financial Times
last year that the carrier was filling 80 per cent of its available
seats and expected to turn a profit by the second half of this year.
 
Wonder how much of 80% is bu!!$#it? Hope you guys make it. Have afew friends there.

GoodLuck
 
Ah, about a year ago. It was actually a lot of fun. Nice to get a job offer as well. Why, you still stalking me?
 
yeah, most alpa carriers are so crappy run that they can't keep you employed ....so you have to go somewhere else to put food on the table
 
Yes i was turned down by spirit. I spent my whole life preparing myself and now my career is over so I have resorted to self fufilling prophecies here on flight info.

Honestly though I have absolutely no animosity towards spirit or any other airline. In my humble opinion spirit will not be a survivor for many of the same reasons stated in the article above and many others that are not listed.

Dont take offense this is flight info.. Please feel free to bash Jetblue all you want. I am just over 100 numbers away from junior 320 Capt.. Could be 2 years or 20 til upograde and nothing i do can change that so it is the least of my worries.
 

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