Virgin America hangs as its hedge fund owners get antsy

[Ralph Cramden]

Or the one about the kid riding across the border on his bike every day. Customs couldn't figure out where he was hiding the goods, till they realized he was stealing bikes for resale.

But what does this have to do with anything?

 

[Chief Pilot]

Release #09.010
March 27, 2009
DOT Must Scrutinize Virgin America’s Citizenship
WASHINGTON – The Air Line Pilots Association, Int’l, (ALPA) called on the U.S. Department of Transportation this week to hold a public inquiry if there has been a significant change in the ownership interests in Virgin America.
“Serious questions exist as to whether Virgin America is a citizen of the United States entitled to hold a certificate to provide air transportation,” said Capt. Paul Rice, ALPA’s first vice-president. “Given that significant changes appear to have occurred among the company’s investors, the American people deserve a public proceeding to determine whether Virgin America satisfies the law.”
On March 23, ALPA filed a response with the U.S. Department of Transportation in support of a petition by Alaska Airlines to institute a public inquiry into the citizenship and control of Virgin America, Inc.
ALPA’s response focuses on news media reports that two U.S. hedge funds have exercised their rights to sell their interests in Virgin America back to the British Virgin Group and that the airline has not found any U.S. investors to replace them. News media reports also indicate that, while the hedge funds no longer have any beneficial interest in Virgin America, they continue to “hold” 75 percent of Virgin America’s voting stock.
“The idea that a hedge fund counts for actual control of a company even if it holds no benefit or risk defies decades of public policy and current law that prohibits foreign control of U.S. airlines,” said Rice. “Virgin America would have us believe that any level of foreign investment in U.S. airlines is acceptable so long as U.S. citizens retain physical possession of the stock certificates and the right to vote 75 percent of an airline’s voting shares. We don’t agree.”
Labor leaders at both Alaska Airlines and Horizon Air, including the ALPA-represented pilots at Alaska Airlines, also have expressed their unqualified support for Alaska Airlines’ petition.
“The Alaska Air Group Labor Coalition, which represents more than 9,000 unionized employees at Alaska Airlines and Horizon Air, believes there is more than enough compelling evidence for a public review of Virgin America’s citizenship status,” said Capt. Sean Cassidy, vice chairman of ALPA’s Alaska Airlines Master Executive Council and a member of the Labor Coalition. “It is critical that the Department of Transportation ensure all domestic carriers fully and openly comply with U.S. law regarding foreign ownership and control. A failure to do so creates an uneven playing field that jeopardizes American jobs.”
A public inquiry on Virgin America’s citizenship status would also reflect the Obama administration’s commitment to transparency. U.S. Attorney General Eric Holder recently underscored this administration’s “fundamental commitment to open government” in a memorandum to all heads of executive departments and agencies.
“ALPA calls on the Department of Transportation to allow public scrutiny of Virgin America’s citizenship and separate fact from fiction when it comes to who is controlling the airline,” Rice concluded.
Founded in 1931, ALPA is the world’s largest pilots union, representing 52,250 pilots at 35 airlines in the United States and Canada.

Maybe the DOT will finally stand up and take notice. There would be nothing worse for this entire industry than letting Branson break through our foreign ownership laws. Given the considerable lobbying power ALPA holds in D.C., I hope VA has it's ducks in a row. (Well, not really.)

 

[ExFokkerFlyer]

A public inquiry on Virgin America’s citizenship status would also reflect the Obama administration’s commitment to transparency. U.S. Attorney General Eric Holder recently underscored this administration’s “fundamental commitment to open government” in a memorandum to all heads of executive departments and agencies.

You had me to the above quote... hahaha good April Fools!

 

[eskimopilot]

Congress takes an interest
in Virgin America’s ownership

Rep. Oberstar asks DOT to investigate
if U.S. investor stock sale is verified

April 2, 2009
Congress is taking an interest in Alaska Airlines’ call for the Department of Transportation to publicly investigate Virgin America’s citizenship status.

Rep. James Oberstar, chairman of the House Transportation Infrastructure Committee, is asking Transportation Secretary Ray LaHood to verify the accuracy of recent news reports that two U.S. equity funds have sold their 47 percent stake in the airline to British-owned Virgin Group Ltd. If the reports are true, Oberstar is urging the DOT to publicly investigate Virgin America’s citizenship.

“If the equity funds have no further stake in the success of the company, there is serious question as to whether their continued title to the shares is sufficient grounds for them to be considered the owner of the stock — for the purpose of the statutory requirement that a U.S. carrier must have 75 percent of its voting stock owned or controlled by persons that are citizens of the United States,” Oberstar wrote in his letter to LaHood.

According to news reports, the equity funds still hold title to the shares while Virgin searches for a new buyer, but the purchase price has been set and the investors will see no further gains or losses from the airline’s performance.

“We are pleased to see Chairman Oberstar’s call for a comprehensive review by the DOT of whether Virgin complies with U.S. ownership laws,” said Keith Loveless, general counsel for Alaska Air Group. “We hope the DOT will quickly initiate a public proceeding to bring transparency to the actual nature of Virgin's ownership.”

Since Alaska Airlines asked the DOT to investigate Virgin’s ownership on Feb. 10, the Alaska Air Group Employees Labor Coalition and the Air Line Pilots Association national union have expressed their support for the company’s effort.

“Given today’s highly competitive marketplace, it’s especially critical that the DOT ensure all domestic carriers fully and openly comply with U.S. law regarding foreign ownership and control,” the leaders of the six unions that represent more than 9,000 employees at Alaska Airlines and Horizon Air stated in a joint letter sent to Congress. “Failure to do so creates an uneven playing field that places other U.S. carriers at a significant disadvantage and jeopardizes working American jobs.”

Virgin America has not denied reports that the hedge funds have sold their shares back to the company, but insists U.S. investors still hold a majority stake in the airline.
The Labor Coalition’s letter to Congress last week was addressed to Oberstar, a Democrat from Minnesota, and Democratic Sen. Jay Rockefeller of West Virginia, chairman of the Senate Commerce, Science and Transportation Committee.

 

[jayme]

There would be nothing worse for this entire industry than letting Branson break through our foreign ownership laws.

And why is that, exactly?

 

[metroplex]

why is there such a law in the airline industry.???? where is the problem if a foreign entity pumps millions into the us economy and providing thousands with jobs. banks, the autoindustry, you name it , have often more than 50% foreign ownership. who cares where the money comes from. US carriers are just concerned that their products get "crushed" by foreign products. with outdated contracts, old planes, greedy CEOs they can't compete.....

 

[bluesideup340]

why is there such a law in the airline industry.???? where is the problem if a foreign entity pumps millions into the us economy and providing thousands with jobs. banks, the autoindustry, you name it , have often more than 50% foreign ownership. who cares where the money comes from. US carriers are just concerned that their products get "crushed" by foreign products. with outdated contracts, old planes, greedy CEOs they can't compete.....

Dear Metroplex
You need to go easy here and not use logic. What are you thinking? This is FI, most people in aviation are very narrow minded with an equally narrow vision, capable of looking through a keyhole with both eyes at the same time.

 

[Ralph Cramden]

Dear Metroplex
You need to go easy here and not use logic. What are you thinking? This is FI, most people in aviation are very narrow minded with an equally narrow vision, capable of looking through a keyhole with both eyes at the same time.

Yeah, I see those types here every day. The republican unionists. They are fun to poke a stick at.

 

[Britpilot]

why is there such a law in the airline industry.???? where is the problem if a foreign entity pumps millions into the us economy and providing thousands with jobs. banks, the autoindustry, you name it , have often more than 50% foreign ownership. who cares where the money comes from. US carriers are just concerned that their products get "crushed" by foreign products. with outdated contracts, old planes, greedy CEOs they can't compete.....

Look up C.R.A.F. This will help you understand.

 

[Chief Pilot]

Look up C.R.A.F. This will help you understand.

Brit...even though you bring up one of a myriad of good points, you are wasting your time trying to help these folks understand. I suppose I don't really blame them for burying their heads in the sand over how tenuous their job has become. It doesn't matter what you say, or how valid your argument, these folks at VA will cling to some shred of half truth to justify that they should still be in business.

My advice to those at VA with families to support is dust off the old resume and start thinking about plan B, or maybe plan C. You could be in the middle of a two or three day trip, report to the airport for departure, and find that the airline has closed it's doors. You will be the last to know. Don't believe it? Just ask some folks from ATA how that felt.