Arnie Uses Tax to Lure Branson's Virgin to LA
SYDNEY (Reuters) - California Governor Arnold Schwarzenegger (news - web sites) may offer tax breaks to tempt Richard Branson's Virgin Group into setting up its discount U.S. airline in Los Angeles, the British billionaire said on Monday.
"Arnold Schwarzenegger rang me last night, he's trying to persuade us to go to Los Angeles, and trying to see whether he can offer us some good tax breaks," Branson told reporters in Sydney.
"We'll see whether he can be as successful as he is in the films in persuading us to go there," said Branson who was in Sydney to oversee the launch of his discount airline Virgin Blue's Australian Stock Exchange debut.
Virgin plans to set up a low-cost U.S venture by mid-2004 to rival discount airline such as JetBlue Airways Corp and Southwest Airlines but has yet to decide where to headquarter the new carrier, likely to be named Virgin USA.
Under U.S. laws, Virgin Group would be allowed to own only 49 percent of the venture, and would rely on other investors to fund its start-up costs of around $300 million.
"We think that we can raise most of the money actually by bringing in partners for up to 51 percent, as people want to invest in the Virgin brand and our expertise and they're willing to pay a premium," Branson said.
"It might cost $300 million to set up, but I don't think Virgin Group have to put up a lot of that."
Negotiations were continuing with aircraft manufacturers Boeing Co or Airbus over fleet for the new airline, with a decision likely within six weeks, Branson said.
Last month, the British entrepreneur called on the film star-turned-politician to help rescue plans to fly the world's biggest passenger plane, the Airbus A380, into Los Angeles airport.
