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Under the law, airline might not still qualify as a U.S. carrier

By Jim Berard 202-226-5064

The Chairman of the Committee on Transportation and Infrastructure is questioning whether Virgin America Airlines qualifies as a U.S. carrier under the law.

In a letter to Secretary of Transportation Ray LaHood today, Chairman James L. Oberstar (Minn.) pointed out that recent reports of transfers, which have not been denied by Virgin, may indicate that Virgin America is outside the legal limits for foreign ownership.

In his letter, Oberstar cites news reports that two U.S. equity funds have sold their shares—amounting to 47 percent of the airline’s voting stock—to Virgin Group. According to the reports, the equity funds still hold title to the shares while Virgin searches for a new buyer, but the purchase price has already been set and the funds will see no further gains or losses from the airline’s performance.

“If these reports are accurate, it calls into question whether Virgin America continues to meet the requirements for holding a certificate as a U.S. air carrier,” Oberstar’s letter reads. “If the equity funds have no further stake in the success of the company, there is serious question as to whether their continued title to the shares is sufficient grounds for them to be considered the owner of the stock, for the purpose of the statutory requirement that a U.S. carrier must have 75 percent of its voting stock owned or controlled by persons that are citizens of the United States.”

Oberstar asks the Secretary to order a comprehensive review of the accuracy of the news reports, and, if the reports are proven correct, to conduct a public proceeding to examine the question of Virgin America’s citizenship.

Click here to see a copy of the letter.                                                                  

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