DOT Rejects Challenge To Virgin America's U.S. Ownership Status - Business Travel News

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DOT Rejects Challenge To Virgin America's U.S. Ownership Status

January 08, 2010 - 12:00 AM ET

By Jay Boehmer

The U.S. Department of Transportation today confirmed Virgin America as a citizen fit to operate in the United States, dismissing an Alaska Airlines petition that claimed a change in investment structure thrust Virgin's foreign ownership above legal limits.

Alaska Airlines in February 2009 filed a petition asking DOT to publicly inquire into the citizenship of Virgin America after "Cyrus Capital Partners L.P. and Black Canyon Capital LLC, the two U.S. hedge funds holding 75 percent of Virgin America's voting stock, exercised puts that surrendered back to the British Virgin Group all of the economic rights traditionally associated with being a shareholder," according to Alaska's petition to the DOT.

Alaska's effort gained momentum with support from labor organizations, including the Air Line Pilots Association, the Association of Flight Attendants and the Transport Workers Union of America, in addition to what Alaska called "two aviation leaders in Congress:" Sen. Patty Murray (D-Wash.), chairperson of the Senate's transportation appropriations subcommittee, and Rep. James Oberstar (D-Minn.), chairman of the House Transportation and Infrastructure Committee.

Despite those requests for a public review, DOT today said it was "not persuaded that the public interest requires us to institute a public proceeding in this matter." Instead, DOT opted for "an informal continuing fitness review," which resulted in its conclusion "that Virgin America remains a U.S. citizen, subject to certain conditions."

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