Interview: Virgin Atlantic CEO Craig Kreeger

Delta Air Lines and Virgin Atlantic next month plan to start sharing codes, enabling passengers to earn and burn frequent-flyer miles for travel on both carriers and granting elite customers access to their respective airport lounges. The carriers made those announcements on Monday as Delta officially purchased a 49 percent equity stake in Virgin Atlantic after obtaining regulatory approvals. More cooperation will come should the U.S. Department of Transportation approve airlines' proposed joint venture. That decision is expected before the end of November.

As Delta and Virgin Atlantic are poised to co-market flights, the latter confirmed plans to dissolve a codeshare relationship with US Airways. It's no surprise, considering US Airways' looming merger with American Airlines would align it with British Airways, Virgin's chief transatlantic rival. Assuming the role of Virgin Atlantic CEO in February, former AA veteran Craig Kreeger on Monday spoke with BTN senior editor Jay Boehmer about those and other developments. An edited transcript follows.

What are the next steps regarding your antitrust immunity request with the Department of Transportation?

The ball is in their court, and we have no reason to expect a problem. We're anticipating that we'll get word within the next three to four months, and that will put us in place to hit the timeline we originally set, which is to start the joint venture by the beginning of next year.

In addition to code sharing and frequent-flyer reciprocity, what else can you and Delta do before securing antitrust immunity?

The best way to think about it is the stuff we announced [on Monday]—the code share, the frequent-flyer deal, the lounge access reciprocity. Those are the big-ticket items for us to do pre-ATI. Within the boundaries of what we can talk about, we're starting to plan for the subsequent things, but there are limitations. Given the natural scrutiny associated with these types of processes, you just wait until you have approval. What we announced [Monday] is a really big customer-facing set of changes that should start driving value for customers and for us.

The ATI request with DOT includes Air France, KLM and Alitalia, but the request only covers routes between the United Kingdom and North America. How do those carriers fit into the picture?

This is a U.K.-to-North America joint venture with Delta Air Lines. Because Delta has this other joint venture, it's important for them to be able to manage their business in an efficient way and not suddenly have to segment their brains so that one person can't know about both things. Getting full ATI is helpful for managing each joint venture independently in a way that doesn’t create challenges. It also sets up the possibility that if we do reach an arrangement with Air France and KLM or Alitalia, that we would already be positioned to enact things much more quickly. We haven't gone down that path yet, but it's a path that's available to us.

Virgin Atlantic in 2008 announced a five-year reservations system deal with HP. Are you out to bid for a new res system?

We're looking at alternatives. It's a big decision for an airline to make, and we've seen what happens when things go slightly wrong with a passenger services system. We're thinking about what alternatives we have in that area, but we're not anywhere near making a decision yet.

What's top of mind regarding IT strategy?

IT is a challenge for a company of our size and a company with our branding. We really have to spend a fair amount on IT to stay consistent with our brand promise. We're looking to find ways in places that are not brand-related—back office, these kinds of things—to get more off the shelf, so we can spend more money on customizing things that impact our customers directly. I think our theme would be simplify [in areas] away from the customer and create flexibility to use technology effectively to interact with customers or to give our people who touch our customers better tools and information to interact with customers. The PSS decision fits into that, as would other potential technology decisions. We're looking to see whether there are things Delta has invested in already that would be useful to us on the technology side.

Virgin Atlantic recently launched some short-haul services. How are those performing?

Pretty much on track. It's in the start-up phase. Loads will be perfectly reasonable through the summer. The key for us is to be on track as we roll into September. We're moving down the line with bookings still growing. We're encouraged, and I think Delta's code moving onto those flights will be helpful, and we've begun to add some of our other partners in other parts of the world onto those flights too. The idea of trying to create new connecting opportunities onto our domestic services to Edinburgh, Aberdeen and Manchester is a real long-term plan.

What's your read on corporate demand on the transatlantic?

Things are pretty good for the summer, but the summer isn't the key period for evaluating the answer to your question. It's a little early to jump in and say what we see for the autumn, but summer is pretty solid.

How have your first few months at Virgin gone?

It's been five months at Virgin Atlantic and the overarching impression is that the people of Virgin Atlantic are extremely proud of the brand they represent. It's a great place to start as we try to move the company forward. With that as a backdrop, we're committed to ensuring that we continue to find ways to keep generating that kind of feeling in our people and our customers, while turning around the financials of the company.

We have a two-year plan to return the company to profitability. We're two to three months into that plan and feeling very confident that we're headed in the right direction. We have cost initiatives—a lot of small things. We have new airplanes coming—the [Boeing] 787 starting in 2014. We're flying our [Airbus] A330s throughout this year and saving a lot of money versus the A340s they replaced. We have a lot of momentum in getting things in place.

The big kicker on top of that is our partnership with Delta, to start generating some more customer loyalty and some more revenue. We really believe that when Delta's customers experience our products and services, that it's going to be a huge win for us and for Delta. This step is a big step in terms of our turnaround.