U.S. regulators on Friday ruled that low-cost airline Virgin America meets citizenship requirements to operate as a U.S. carrier.
The Department of Transportation has been reviewing the airline's ownership following a restructuring and allegations from other airlines that it breached a law requiring that it be 75% owned by, and under the control of, U.S. citizens.
The airline, which had hoped to have a decision from regulators by the end of 2009, has maintained it meets all ownership requirements after its capital restructuring.
The DOT said Friday that Virgin America had agreed to "make a number of changes to ensure that the air carrier would remain under the ownership and actual control of U.S. citizens," with assurances that it would seek U.S. investment, and add U.S. citizens to its board of directors.
The airline's launch in 2007 was delayed by more than two years as rival carriers questioned whether it met the ownership criteria. Concerns were raised again earlier this year when one of its founding investors exercised a put option.
Virgin America expects to report a profit for the first time this year.
The airline on Friday released a proposed new ownership structure that doesn't change its voting stock configuration, which is 75% held by U.S.-based VAI Partners, LLC, and 25% held by Virgin Group in the U.K.
The airline said ownership in the VAI stake will change to include Cyrus Aviation Investor, LLC--55.5%; VAI MBO Investors--27.8%; VX Employee Holdings, LLC--16.7%; and VAI Management, LLC--less than 1%.
Virgin America said Friday it plans to obtain $68.4 million in unsecured debt from its shareholders, to improve liquidity and position the airline for growth.
Alaska Air Group Inc. (ALK) led the critics, calling for a public review of Virgin America's ownership. The airline wasn't immediately available for comment.
The Transportation Department has rejected an Alaska Airlines challenge to the U.S. citizenship status of privately held carrier Virgin America.
The agency said Friday that Virgin America remains a U.S. citizen and remains under the actual control of U.S. citizens. Under U.S. law, foreign ownership in a U.S. air carrier is limited to 25 percent of the voting interest in the carrier.
The Virgin Group, controlled by British billionaire Richard Branson, is a minority holder in Virgin America. DOT said the Virgin Group holds a 25 percent equity stake in Virgin America.
Virgin America, based in Burlingame, Calif., has agreed to ensure that it will get new investments of capital from entities other than the Virgin Group. It also will add another U.S. citizen to its board. That will result in seven U.S. citizens as voting members on the nine-member board.
Some analysts said Alaska Airlines and United Airlines would have stood to gain if Virgin America were to fold.
Alaska Airlines first filed a petition in February 2009 questioning Virgin America's citizenship status, following news reports that suggested Virgin America had tilted toward foreign ownership.
DOT said it conducted a thorough review, finding in favor of Virgin America, which had vigorously defended itself against the claims of Alaska Airlines, a subsidiary of Alaska Air Group Inc. based in Seattle. Virgin America has said Alaska Airlines' arguments relied "on inaccurate facts."
DOT originally certified Virgin America's citizenship status in August 2007, when the carrier launched service. The carrier later notified the government of a significant potential shift in its shareholder makeup.
Based on its findings announced Friday, DOT dismissed petitions by Alaska Airlines and the Aircraft Mechanics Fraternal Association for a public inquiry into Virgin America's citizenship.
There was no immediate comment Friday from Alaska Airlines. An e-mail seeking comment was sent to two spokeswomen for the airline.
The Department of Transportation has been reviewing the airline's ownership following a restructuring and allegations from other airlines that it breached a law requiring that it be 75% owned by, and under the control of, U.S. citizens.
The airline, which had hoped to have a decision from regulators by the end of 2009, has maintained it meets all ownership requirements after its capital restructuring.
The DOT said Friday that Virgin America had agreed to "make a number of changes to ensure that the air carrier would remain under the ownership and actual control of U.S. citizens," with assurances that it would seek U.S. investment, and add U.S. citizens to its board of directors.
The airline's launch in 2007 was delayed by more than two years as rival carriers questioned whether it met the ownership criteria. Concerns were raised again earlier this year when one of its founding investors exercised a put option.
Virgin America expects to report a profit for the first time this year.
The airline on Friday released a proposed new ownership structure that doesn't change its voting stock configuration, which is 75% held by U.S.-based VAI Partners, LLC, and 25% held by Virgin Group in the U.K.
The airline said ownership in the VAI stake will change to include Cyrus Aviation Investor, LLC--55.5%; VAI MBO Investors--27.8%; VX Employee Holdings, LLC--16.7%; and VAI Management, LLC--less than 1%.
Virgin America said Friday it plans to obtain $68.4 million in unsecured debt from its shareholders, to improve liquidity and position the airline for growth.
Alaska Air Group Inc. (ALK) led the critics, calling for a public review of Virgin America's ownership. The airline wasn't immediately available for comment.
The Transportation Department has rejected an Alaska Airlines challenge to the U.S. citizenship status of privately held carrier Virgin America.
The agency said Friday that Virgin America remains a U.S. citizen and remains under the actual control of U.S. citizens. Under U.S. law, foreign ownership in a U.S. air carrier is limited to 25 percent of the voting interest in the carrier.
The Virgin Group, controlled by British billionaire Richard Branson, is a minority holder in Virgin America. DOT said the Virgin Group holds a 25 percent equity stake in Virgin America.
Virgin America, based in Burlingame, Calif., has agreed to ensure that it will get new investments of capital from entities other than the Virgin Group. It also will add another U.S. citizen to its board. That will result in seven U.S. citizens as voting members on the nine-member board.
Some analysts said Alaska Airlines and United Airlines would have stood to gain if Virgin America were to fold.
Alaska Airlines first filed a petition in February 2009 questioning Virgin America's citizenship status, following news reports that suggested Virgin America had tilted toward foreign ownership.
DOT said it conducted a thorough review, finding in favor of Virgin America, which had vigorously defended itself against the claims of Alaska Airlines, a subsidiary of Alaska Air Group Inc. based in Seattle. Virgin America has said Alaska Airlines' arguments relied "on inaccurate facts."
DOT originally certified Virgin America's citizenship status in August 2007, when the carrier launched service. The carrier later notified the government of a significant potential shift in its shareholder makeup.
Based on its findings announced Friday, DOT dismissed petitions by Alaska Airlines and the Aircraft Mechanics Fraternal Association for a public inquiry into Virgin America's citizenship.
There was no immediate comment Friday from Alaska Airlines. An e-mail seeking comment was sent to two spokeswomen for the airline.
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