Virgin Pays 9 million to AA for Love

[scarlet]

Did Virgin actually win? Why AA wanted VX to get the gates, move from DFW, and pay them 9 million dollars (per DOJ) Was that not their profit for a whole year recently?

How long will it take at 49/69.00 to make that money back?
You will only ever get 2 gates.

The city of Dallas (like Denver) makes sure the gates are used and not sitting idle=Smart.

 

[N1atEcon]

A long time.
9,000,000 divided by paying customers with their butts in a seat per day= years.
Some one fill in the blanks. How many seats on a VX AC?


FYI, Net Income of $10.1 Million Marks First Full Year of Profitability


Famous quote:

1. "I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve."
2. Isoroku Yamamoto - Speaker of "Sleeping Giant" Quote After ...
   
   
   

 

[HDA]

A long time.
9,000,000 divided by paying customers with their butts in a seat per day= years.
Some one fill in the blanks. How many seats on a VX AC?


FYI, Net Income of $10.1 Million Marks First Full Year of Profitability


Famous quote:

1. "I fear all we have done is to awaken a sleeping giant and fill him with a terrible resolve."
2. Isoroku Yamamoto - Speaker of "Sleeping Giant" Quote After ...
   
   
   

4.5M per gate is a bargain.

 

[redflyer65]

Did they get a refund from DFW when they leave? Maybe AA can make that happen..

 

[tzskipper]

Literacy an issue?

The amount to be paid is $4 million....

The city of Dallas today gave its approval for airline Virgin America to get two gates at Dallas Love Field to expand its North Texas operations, putting an end to a months-long debate.
?We are very pleased to have the opportunity to bring new competition to Love Field, an important airport for travelers because of its proximity to the city?s central business district,? Virgin America chief executive David Cush said today in a statement.
Virgin America, Southwest Airlines and Delta Air Lines have been vying for use of two gates that American Airlines must divest as part of a Nov. 12 antitrust settlement with the U.S. Department of Justice related to its merger with US Airways. Airlines want access to Love Field as Wright Amendment flight restrictions there expire Oct. 13.
American and Virgin America signed an agreement for the two gates and the DOJ approved the deal. Virgin America just needs Dallas city manager A.C. Gonzalez?s stamp of approval per American?s original lease agreement with the city.
Dallas City council was briefed on the matter last week, but city officials have not express support for any particular airline. However, a report prepared for the city by L.E.K. Consultants about the competing requests for the Love Field gates concluded that Southwest would bring more good for Dallas citizens and businesses than Virgin America or Delta Air Lines.
The DOJ said it would reject city proposals to give the gates to Southwest or Delta. And in a letter sent to the city early last week, the DOJ said giving the gates to Virgin America would increase competition at Love Field and was the only airline that would fulfill terms of its settlement with American. American does not currently use the Love Field gates and subleases them to Delta and Seaport Airlines.
Gonzalez had said he expected to make a decision by the end of last week, but it came today instead.
?Contrary to reports, this was not a competition,? Gonzalez said today in a statement. ?While initially, the City was told to expect a collaborative process, the Justice Department eventually required American Airlines to sub-lease the Love Field gates to a chosen airline.?
He said the city took additional time to ?make sure our actions would be responsible and capture the vision of the Justice Department?s selected carrier.?
Virgin America will provide a performance guaranty in the form of a $4 million irrevocable letter of credit to American to ensure the lease obligations, according to a memo sent from Gonzalez to the Dallas City Council members.
The city also incorporated Virgin?s publicly stated intentions into a compliance agreement, Gonzalez said. The agreement includes:
* Obligates Virgin to comply to standards included in the city?s noise abatement program.
* Clarifies and expands how unused gate space might be made accessible to other airlines.
* Protects the city from possible legal expense through an indemnification clause.
?I applaud Mr. Gonzalez for his thorough approach to making this important decision,? Dallas Mayor Mike Rawlings said today in a statement. ?I support his approval of the sublease between American Airlines and Virgin America because it is best for the citizens of Dallas.?
After last week?s City Council meeting, Virgin America chief executive David Cush said he was ?highly confident? his airline would get the gates. Last week, the airline launched a campaign to ?free Love Field,? bringing its high-profile British founder Richard Branson to a rally in Dallas and writing a ?love letter? to the city.
Branson told The Dallas Morning News that he visited Dallas last week ?to get across the idea that competition matters ? that competition is beneficial obviously to the traveling public.?
Virgin America operates six daily flights to San Francisco and Los Angeles from Dallas/Fort Worth International Airport, but plans to move operations to Love Field in October if they get the gates.
Southwest has said it would use the two gates to add 20 more flights to five new destinations. Southwest CEO Gary Kelly noted that his airline lowers fares when it enters markets, doesn?t charge for bags or to change reservations and overall offers benefits to travelers that other carriers do not.
The Dallas-based carrier has 16 of the 20 gates at Love Field. United Airlines operates two gates.
Statement by Dallas city manager A.C. Gonzalez to City Council members about Love Field gates decision

 

[HDA]

The amount to be paid is $4 million....

The city of Dallas today gave its approval for airline Virgin America to get two gates at Dallas Love Field to expand its North Texas operations, putting an end to a months-long debate.
?We are very pleased to have the opportunity to bring new competition to Love Field, an important airport for travelers because of its proximity to the city?s central business district,? Virgin America chief executive David Cush said today in a statement.
Virgin America, Southwest Airlines and Delta Air Lines have been vying for use of two gates that American Airlines must divest as part of a Nov. 12 antitrust settlement with the U.S. Department of Justice related to its merger with US Airways. Airlines want access to Love Field as Wright Amendment flight restrictions there expire Oct. 13.
American and Virgin America signed an agreement for the two gates and the DOJ approved the deal. Virgin America just needs Dallas city manager A.C. Gonzalez?s stamp of approval per American?s original lease agreement with the city.
Dallas City council was briefed on the matter last week, but city officials have not express support for any particular airline. However, a report prepared for the city by L.E.K. Consultants about the competing requests for the Love Field gates concluded that Southwest would bring more good for Dallas citizens and businesses than Virgin America or Delta Air Lines.
The DOJ said it would reject city proposals to give the gates to Southwest or Delta. And in a letter sent to the city early last week, the DOJ said giving the gates to Virgin America would increase competition at Love Field and was the only airline that would fulfill terms of its settlement with American. American does not currently use the Love Field gates and subleases them to Delta and Seaport Airlines.
Gonzalez had said he expected to make a decision by the end of last week, but it came today instead.
?Contrary to reports, this was not a competition,? Gonzalez said today in a statement. ?While initially, the City was told to expect a collaborative process, the Justice Department eventually required American Airlines to sub-lease the Love Field gates to a chosen airline.?
He said the city took additional time to ?make sure our actions would be responsible and capture the vision of the Justice Department?s selected carrier.?
Virgin America will provide a performance guaranty in the form of a $4 million irrevocable letter of credit to American to ensure the lease obligations, according to a memo sent from Gonzalez to the Dallas City Council members.
The city also incorporated Virgin?s publicly stated intentions into a compliance agreement, Gonzalez said. The agreement includes:
* Obligates Virgin to comply to standards included in the city?s noise abatement program.
* Clarifies and expands how unused gate space might be made accessible to other airlines.
* Protects the city from possible legal expense through an indemnification clause.
?I applaud Mr. Gonzalez for his thorough approach to making this important decision,? Dallas Mayor Mike Rawlings said today in a statement. ?I support his approval of the sublease between American Airlines and Virgin America because it is best for the citizens of Dallas.?
After last week?s City Council meeting, Virgin America chief executive David Cush said he was ?highly confident? his airline would get the gates. Last week, the airline launched a campaign to ?free Love Field,? bringing its high-profile British founder Richard Branson to a rally in Dallas and writing a ?love letter? to the city.
Branson told The Dallas Morning News that he visited Dallas last week ?to get across the idea that competition matters ? that competition is beneficial obviously to the traveling public.?
Virgin America operates six daily flights to San Francisco and Los Angeles from Dallas/Fort Worth International Airport, but plans to move operations to Love Field in October if they get the gates.
Southwest has said it would use the two gates to add 20 more flights to five new destinations. Southwest CEO Gary Kelly noted that his airline lowers fares when it enters markets, doesn?t charge for bags or to change reservations and overall offers benefits to travelers that other carriers do not.
The Dallas-based carrier has 16 of the 20 gates at Love Field. United Airlines operates two gates.
Statement by Dallas city manager A.C. Gonzalez to City Council members about Love Field gates decision

2M per gate is an even bigger bargain!

 

[HRDiva]

Assuming the article is accurate, The article says they are getting a $4MM letter of credit to back the leases. So, they are not "getting" the gates. They are still owned by AA. They are leasing. A letter of credit is a document that is issued by a bank backing a debt obligation (this lease). Unless there is a draw on it because Virgin doesn't make the lease payments (at which point it becomes a loan with interest), there are only annual fees on the letter of credit.

 

[scarlet]

The First release by the city stated was 9 Million., either way. When you make 10 million in a years time and you pay 4 million for two gates out of a city, where you will be competing on 30 flights a day to SFO/LAX/Chicago/New York/DC. What do you think the prices will be?? Where is Legend? HOW long will it take to make that 4 million dollars back from DAL flights? Econo 101, would issue a huge F. When you fly out of the city already 15 miles away, and are not restricted to two gates.

 

[scoreboardII]

I would not want to be the VX employee having to park my car with a big red Virgin bumper sticker in that lot, just saying.

 

[scoreboardII]

The First release by the city stated was 9 Million., either way. When you make 10 million in a years time and you pay 4 million for two gates out of a city, where you will be competing on 30 flights a day to SFO/LAX/Chicago/New York/DC. What do you think the prices will be?? Where is Legend? HOW long will it take to make that 4 million dollars back from DAL flights? Econo 101, would issue a huge F. When you fly out of the city already 15 miles away, and are not restricted to two gates.

I agree, this is going to be a bleedfest for VX. Good luck in any event.