Alaska Air Group Inc. on Tuesday called on government officials to
launch a probe into whether rival Virgin America Inc. continues to meet the standards for being a U.S. carrier.
Virgin America began service in August 2007 after a lengthy review process into its ownership structure. The airline is the brainchild of British entrepreneur Richard Branson, but under U.S. law foreigners are only allowed to own 25% of an airline's voting stock. Virgin cleared the hurdle by selling a 75% stake to VAI Partners LLC, a group of U.S.-based private equity investors.
Alaska's new request cites news reports that suggest Virgin America "may no longer be a U.S. citizen or is in clear danger of losing its citizenship." Though the report is not identified, the airline is likely referring to a BusinessWeek
piece from earlier this month mentioning that while Branson is likely willing to weather economic headwinds, what is "far less clear is how patient the private equity groups will be in the face of ongoing losses and the prospect of a prolonged recession."
It seems unlikely that a speculative news story will prove enough to warrant a new governmental review. But for Seattle-based Alaska, which competes with Virgin America up and down the West Coast, the call if nothing else is a fresh reminder to the startup that its every move is being watched. And that could make it just a little more difficult for Virgin America to raise new capital if indeed its U.S. investors seek an exit. -
Lou Whiteman
Join Corporate Dealmaker's LinkedIn forum
Juergen Lasowski
And the winners are...
Being born in Washington and raised in Alaska I am thoroughly sickened with my home town airline, Alaska. Alaska and Horizon you shock me, instead of focusing on an aggressive fuel hedging program, improved customer service and or finalizing labor negotiations they have resorted to a child-like political smearing tactic of a smaller start-up. Alaska is clearly worried that the loss Virgin has posted was not as significant as they predicted for a start up carrier with $140 a barrel oil. Thank you Alaska for showing us the new American way of business 101! Virgin only has 24% foreign ownership you idiots, it’s not owned by Branson!!! Suck it up and step it up Alaska you got competition