"Virgin America seeks green light for ticket sales"

Thursday, July 5, 2007

Virgin America seeks green light for ticket sales
By Doug Cameron in Chicago
United Kingdom - The Financial Times


Virgin America has asked regulators to let the start-up airline begin
selling tickets, amid signs that market conditions in the US are more
favourable than many industry executives had expected.

The San Francisco-based group could launch flights as early as August after
finally securing approval to start domestic services following a 17-month
battle with rivals and watchdogs over its ownership structure, which
includes a 25 per cent stake held by Sir Richard Branson and the Virgin
Group.

Virgin America declined to comment on a start date but this week asked the
US transportation department for permission to accept payments and issue
tickets while it awaits its operating certificate.

The company said it was fully staffed and ready to start services with 10
aircraft, with services to New York, Los Angeles, San Diego, Las Vegas and
Washington DC expected to form the initial focus. Virgin America also said
it had yet to find a replacement for Fred Reid as chief executive after
regulators required him to step down to meet the foreign ownership rules.

Virgin America is the last of three domestic start-ups launching this year -
alongside Skybus and ExpressJet - in spite of concerns from rival airline
executives that overcapacity and softening demand in a US market would
hinder an industry recovering from five years of heavy losses. 

Southwest, the largest domestic carrier, last week said it would slow
capacity growth over the next 18 months to reach its profit goals.

However, traffic reports this week from some of the major airlines this week
suggested business conditions were better than expected, in spite of the
patchy success of efforts to increase fares to match higher fuel costs.

Airline stocks rallied on Tuesday in the wake of the reports, with
Continental rising 11.1 per cent and US Airways up 7 per cent.

Continental is the only carrier to provide monthly margin guidance, and its
performance in June beat analysts' expectations, boosted in part by its
rapid international expansion.

The Houston-based airline also announced this week that it had agreed to
open contract talks with its pilots ahead of schedule at a time when
deteriorating labour relations across the industry are also hindering its
financial recovery.

Contracts at most carriers expire in 2008 and 2009, and union leaders had
called for early talks amid complaints over pay and working conditions.
Continental's move could help it retain and recruit flight crew at a time
when pilot leaders have warned of a looming staffing crisis.

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