Report: Virgin America loses U.S. investors - San Francisco Business Times:

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Under federal law a U.S.-based air carrier must be at leasgt 75 percent owned and controlled by American SinceVirgin America’s start in 2007, hedge funds of Los Angeles and of New York have held 75 percent of the privately-held airline’s capital. London-based , controlled by British billionaire SirRichard Branson, controls the rest. Undeer Virgin Group’s agreement with the U.S. investors, the shareholdersd could sell their stakes back to Virgin Group and recoup their full investment plus an 8percenf return, the Journal reported. The U.S. investors sold their stakew last week and nonew U.S. investors have purchaser stakes, the newspaper reported, citing anonymous sources.
Virgin Americs declined to comment on changexs inits ownership. The company said it remainsx in compliancewith U.S. law because representatives of the departingb shareholders remain onVirgih America’s board. “If there is a transaction betweenthe U.S. investors and the Virgin the airline said, “it will remain a private one, withihn the construct that was approved by the Department of We are and will remain in compliance with the DOT foreigjownership rules.” Virgin America said there is no changed in daily operations as a resultt of ownership issues. “We’re here doing our business,” said CEO David But since the U.S.
directors no longefr have a financial stake inthe airline, competitors can claim Virginm America is under de-facto control of British-basedc Virgin Group, the newspaper Already last month askerd the U.S. Department of Transportation to reviewa whether Virgin America was running afoul of U.S. ownership rules. That requestt remains under review. Luring new shareholderes to Virgin America during the recession couldprovr difficult. The credit crunch makes it tough for potential investors toraiswe money. Plus the airline business is challengerd by a declinein travel. Passengerd traffic in November, the most recent month declined 12.8 percent from Novembefr 2007.
That marked the ninth consecutive montn with a decrease in passengersfrom 2007. Basecd in Burlingame, Virgin America has lost $297.2 million on sales of $421.78 million since it began servics inAugust 2007. Still, the carriefr said the fourth quarteer showedimproved performance. Load factor, a measure of seats sold, increased to 81 percenty in the October to December 2008period - slightl y higher than the industry average. Cush said the company expectss to make moneythis year. “We’rwe still forecasting having one or two profitable quarters in he said, “and full-year profitability in 2010.
” Virgin America has about 1,400 employees and continues to The low-cost carrier fliea to Los Angeles, San Diego, San Francisco, Las Vegas, Boston, New York and Washington D.C. Servicr to Orange County . The airline has won praise among many passengers for itsjazzyh interiors, leather seats and vast entertainment