Monday, August 24, 2009

Alaska Airlines Turns Up the Heat on Virgin America

In its dogged pursuit of grounding a rival carrier, Alaska Airlines has refiled its petition before the Department of Transportation for a full inquiry into Virgin America's citizenship profile.  See Renewed Motion of Alaska Airlines, Inc. for a Public Proceeding, Dkt. No. OST-2009-0037 (Aug. 21, 2009).  From the filing:

Almost six months have passed since 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. Alaska Airlines is of the view that Virgin America has lost its status as a U.S. carrier and has therefore been operating illegally ever since these rights were exercised. It also appears, based on the limited publicly available information and the absence of any statement to the contrary, that the Department now considers voting rights stripped of any economic interests to satisfy U.S. citizenship requirements or has provided Virgin America a “grace period” in which to find replacement U.S. investors. Either scenario raises difficult statutory and policy issues. Alaska therefore renews its request for a public review of Virgin America’s current and prospective citizenship status.

Id. at 2-3.

A brief summary of the "story so far" can be found in Kathy Swiff's Alaska Air Wants DOT to Open Virgin America Review, Dow Jones Newswire, Aug. 21, 2009 (available here).

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