Political Climate Continues to Prove Difficult for Virgin America

Virgin

Last week Steve Lott in Aviation Daily wrote about the mounting financial problems plaguing yet-to-fly Virgin America. The airline revealed last Wednesday that it has been forced to raise another $53 million in a disclosure to the DOT. This is in addition to the original $177 million raised more than a year ago that was supposed to be adequate for the start-up airline.

In addition to mounting start-up costs, and escalating legal fees, the airline continues to take new Airbus aircraft deliveries. According to Steve’s article, the airline is now sitting on eight aircraft — six Airbus A320s and two A319s.

But the airline remains much like the now dearly departed dodo. Flightless.

The airline filed its latest reply to concerns voiced by competitors to the DOT just last week, but there’s no question that now new questions will certainly be raised as to the nature and the origination of the additional cash infusion.

Meanwhile — while the airline has picked up some expensive legal eagle help of late, in an attempt to help the airline fight the “foreign ownership” issue, the airline has also begun to lay off some employees.

In Steve’s article the airline was quoted as saying that it may start to look for leasing opportunities for its now non-flying fleet.

As we’ve said from the beginning on this one, I’ve not been impressed by much with this effort. Not by the money the airline has spent, not with the way upper management is structured, not with stories I’ve heard concerning aircraft decisions, and just why they were made, not with what little has been disclosed about how Virgin America would be that much better than alternatives already in the air, and certainly not with the attitude the airline’s management has taken from the start with almost everyone — which has been — we’re going to do this — screw you.

Or as one longtime airline observer and consultant said Monday, “My negativity on Virgin is all about the top leadership. Reid is arrogant, he played the SFO card poorly (rich area to launch a company, but hey, he lives there), he played the DOT card poorly and should have anticipated all the ownership questions, he raised expectations too early (see the many proclamations about starting soon), he hired Stacy Geagan for PR (who’s hated by the media) when you desperately need positive PR to sell your case to DOT, he built a headquarters like the Taj Mahal, took planes too early, pressured DOT too stupidly, and they’re treating suppliers like crap.”

Meanwhile, as I wrote in this week’s PBB, the administration has now backed off its former “hell-bent” desire to go ahead with the DOT rule change concerning foreign ownership. It was rumored that the DOT was going to enact the change before the end of August, in an attempt to prevent Congress from derailing the change before Congress’ actions could take effect in October.

But as a result of the “foiled terror plot” in the U.K., the DOT has now said it will “wait” and proceed more slowly with the intended changes.

This will not only delay a new “Open Skies” agreement with the EU, but I think it clearly is going to continue to make an eventual DOT certification of Virgin that much more protracted. Meanwhile that high-priced list of expenses just continues to add up.

Oh, and one last tidbit. I think maybe there was one fact the high-powered PR machine for Virgin has been negligent on.

Today I found out the airline has been awarded its IATA code.

The code? VX.

Nice.

VX, as in nerve gas.

Think I would have passed on this one and asked for another one.

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