VirginUSA-NYC or SFO not BOS

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http://biz.yahoo.com/rc/040524/airlines_virginusa_2.html

Reuters
UPDATE - Virgin USA airline startup eyes NY, San Francisco
Monday May 24, 10:21 am ET

NEW YORK, May 24 (Reuters) - British entrepreneur Richard Branson said on Monday the Virgin USA startup airline, which is tentatively set to launch sometime next year, has narrowed its choices for a home city to San Francisco or New York.

Speaking at an entrepreneurs' summit, Branson said the carrier, which does not yet have a name, route structure or airplanes, was considering buying aircraft from Boeing (NYSE:BA - News) or Airbus.

"I can't at this stage confirm whether it's going to be Airbus or Boeing ... I think the airline is going to need about 50 planes," he said.

The United States currently restricts foreign ownership of U.S. airlines, allowing a maximum 25 percent voting stake and 49 percent total equity. Some industry experts have expressed concern about how Branson plans to deal with the restrictions and whether he would truly cede control.

Fred Reid, former president of Delta Air Lines (NYSEAL - News), is spearheading the Virgin USA start-up from New York and is said to be busy trying to line up investors.

"We will not own the airline," Branson said in response to a question about the ownership laws. "It will be owned by American companies, and American companies will run the airline. We will have a stake in the airline -- we will license the Virgin brand to it."

Last month, sources familiar with the matter told Reuters that Virgin USA executives told Boeing Commercial Airplanes executives in Seattle they were out of the running for the airplane order, although they cautioned that jet deals often change up to the last minute.

The Virgin order would likely be the largest order from the United States this year, as most American carriers remain mired in a deep financial downturn and are not thinking about buying planes but rather just trying to make money.

Airbus, based in Toulouse, France, is 80-percent owned by the European Aeronautic Defence and Space Co. NV (Paris:EAD.PA - News; XETRA:EAD.DE - News), with the remaining 20 percent held by British aerospace and defense industries group BAE Systems plc (London:BA.L - News).

(Additional reporting by Kathy Fieweger in Chicago)

 

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http://www.boston.com/business/articles/2004/05/25/hub_may_be_off_virgin_usa_radar/

Hub may be off Virgin USA radar
N.Y., San Francisco in apparent lead for headquarters
By Keith Reed, Globe Staff | May 25, 2004

Richard Branson scratched Boston off the list of potential headquarters sites for his US airline start-up, Virgin USA, after a nearly yearlong pursuit by city and state officials.

At a business conference in New York, the flamboyant billionaire named New York and San Francisco as the finalists.

The airline promised to create as many as 1,400 jobs if it started up in Boston.

For months, Virgin USA officials have been saying that Boston, San Francisco, and Dulles, Va., a suburb of Washington, D.C., were the finalists.

Even as Branson said Boston was out of the picture, other company officials said the city's chances were not entirely hopeless. Lori Levin, Branson's spokeswoman, confirmed his statements but said they did not necessarily mean that Boston was out of the running. She said, final word will come from Frederick Reid, the former Delta Air Lines president who was tapped in March to be Virgin USA's chief executive.

"You've got a broad statement from our chairman, but at the end of the day Fred Reid will be heading up this airline in the states, not Richard Branson," Levin said. "Right now were worried about raising the equity, finding the investors and making it the best airline we can."

After the conference, Branson flew out of New York and could not be reached for comment, Levin said.

Officials in Reid's New York office did not return several calls seeking comment yesterday.

Dan Kasper, an aviation analyst at consulting firm LECG LLC in Cambridge, said it appears that Boston has lost. "The fact is that if Branson himself says it's between New York and San Francisco, then that doesn't bode well for Boston," Kasper said.

Boston and Massachusetts officials have spent months trying to win over Virgin executives with a $1.5 million economic incentives package. City leaders and the Massachusetts Port Authority, which runs Logan International Airport, were promising office space in the Boston Marine Industrial Park, on the South Boston Waterfront and near Logan. The space is owned by the Boston Redevelopment Authority. Virgin was interested in building flight simulators near the industrial park.

Local officials yesterday said they don't think Boston is out of the running, saying they've been in contact with Virgin executives in recent weeks and have not been told that the city lost out.

"We have not been notified that we are not in the running," said Susan Elsbree, a spokeswoman for the BRA. The agency is leading a team that included Boston Mayor Thomas M. Menino, representatives of Governor Mitt Romney, and officials from Massport.

"What they had been telling us is that they're working on different parts of the business deal, and that right now, the headquarters search isn't their main focus," Elsbree said.

Sarah D'Souza, a Romney spokeswoman, said the governor's office also had not been told that Boston was eliminated.

Branson's comments came as part of a summit between US and European entrepreneurs hosted by US Treasury Secretary John Snow and his British counterpart, Gordon Brown.

There are other issues for the airline. Branson has not yet disclosed who his partners in the airline might be. Under US law, a foreign citizen cannot own more than 25 percent of a domestic airline and have no more than 49 percent voting control. In addition, Branson said yesterday, he is negotiating with Airbus and Boeing to buy airplanes for the carrier.

Keith Reed can be reached at [email protected].

 

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http://www.boston.com/business/articles/2004/05/27/boston_loses_bid_to_host_virgin_usa/

Boston loses bid to host Virgin USA
By Keith Reed, Globe Staff | May 27, 2004

It's official: Boston is out of the running to become the headquarters of the planned Virgin USA start-up airline.

City officials said the airline's chief executive, Frederick W. Reid, called Mayor Thomas M. Menino yesterday morning to deliver the news that the choice had been narrowed to New York or San Francisco. Reid's call came two days after Richard Branson, the billionaire British businessman behind the carrier, let the cat out of the bag at a conference in New York.

Reid's call officially ended a nine-month quest by a coalition of city, state, and business leaders to win the headquarters, and with it as many as 1,400 new jobs. With Reid's disclosure also come new details about the search, including the fact that local leaders had worked quietly on their pitch for at least two months before initial reports about the carrier's search emerged in November.

''For strategic reasons they decided to short-list New York and San Francisco," said Mark Maloney, director of the Boston Redevelopment Authority. Maloney's agency led the Virgin pitch.

He said Reid did not disclose the reasons why Boston did not make the cut.

''They loved Boston and the way we did things," Maloney said. ''We're disappointed, but we succeed more than we lose by a lot. In this instance we didn't win."

Calls to Reid's office were not returned yesterday.

Boston began chasing the Virgin headquarters in September, after Virgin officials contacted the Massachusetts Port Authority to discuss Branson's desire to start a low-fare airline in the United States. Local leaders sent a proposal to Frances Farrow, Branson's top deputy in the United States, in October.

In February, Menino, Governor Mitt Romney, and local business leaders hosted Farrow and her team, giving them tours of the city and potential office space. After several meetings between the Boston team and Virgin, Virgin named Boston, San Francisco, and Dulles, Va., a suburb of Washington and home to Dulles International Airport, as the finalists.

A Romney spokeswoman said Reid called the governor yesterday but that Romney was out of town at the time. He plans to call Reid when he returns, she said.

The three finalist cities competed fiercely in the past several months.

To sweeten the pot, Boston officials offered $1.5 million in economic incentives for job training. The redevelopment authority set aside office space on the eighth floor of a building it owns at the Boston Marine Industrial Park, where Virgin expressed interest in locating.

There was one problem, though: The space is already under a temporary lease to another tenant, Seaport Graphics, which has offices in building but was eyeing the eighth floor for an expansion.

Maloney said Seaport had signed a short-term lease with the agreement that if Virgin wanted it, the city would help Seaport find another location inside the industrial park for its location.

Since Virgin walked away from the deal, ''We'll have that space leased in short order," he said. The job training cash, culled from city, state, and federal funds, is still available to be used in future deals, Maloney said.

With cash and real estate on the table, not to mention gifts of lobsters, T-shirts, and candy showered on Virgin's headquarters selection team, Boston seemed to have as good a chance, if not better, than the other two cities. The company had said publicly that it was looking for a headquarters city with an airport where it could originate many of its flights, and there was speculation that it also wanted to choose a city where Branson's international carrier, Virgin Atlantic, could accept connecting passengers for flights to Europe.

Virgin Atlantic has one daily flight between Boston and London.

After Reid was hired away from his post as president of Delta Air Lines in March, Virgin put its headquarters search on hold to focus on raising capital, finding US-based business partners, and negotiating to buy planes.

Then came the big blow, when Branson, speaking at an entrepreneurs summit in New York on Monday, unexpectedly said that only New York and San Francisco were still being considered.

While they acknowledged his statements, both Virgin and city officials initially denied that Boston officially had been eliminated.

Maloney said he remained hopeful that Virgin would still do some business here. The carrier remains interested is offering service at Logan International Airport once it finally launches, he said.

''I would fully expect that Virgin would certainly have Boston on its radar screen as one of the destinations that it would fly to," he said. ''In our conversation it became clear to us that they realized the value of Boston as a destination for their airline. We already have made arrangements to continue talking to them about how they can put Boston very definitely into their expansion plans."

Keith Reed can be reached at [email protected].