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Virgin America gets grounded by DOT

29 December 2006

Startup airline Virgin America Inc. got an expected rejection from the government Wednesday, when the Department of Transportation ruled that the company must change its corporate structure before it can get an operating certificate.

The Burlingame, Calif.-based branchild of Sir Richard Branson — head of England’s Virgin Atlantic Airways Ltd. — had planned to begin low-cost flights in 2007. Branson raised $177 million in startup capital for the airline in December 2005 from U.S. private equity firms and from himself.

However, the DOT said Virgin America doesn’t meet a requirement that the president and two-thirds of the board of directors are Americans, and Virgin America’s relationship with the British Virgin Group in the U.K. “‘indicates that the carrier is not under the actual control of U.S. citizens.'”

source: Dallas Business Journal

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