Virgin America offers concessions to DOT

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By Ruth Mantell, MarketWat=

Virgin America offers concessions to DOT=0A=0A=0ABy Ruth Mantell, MarketWat=
ch=0ALast Update: 8:23 PM ET Jan 17, 2007=0A=0ASAN FRANCISCO (MarketWatch) =
-- Looking to overcome foreign-ownership related objections from the Depart=
ment of Transportation, Virgin America on Wednesday said the power of the U=
nited Kingdom's Virgin Group has been tamped.=0AAmong other moves, Virgin G=
roup has dropped a seat on Virgin America's board, and now holds two of the=
 eight voting seats. Also, Virgin Group has agreed to put all of its voting=
 shares in a voting trust with a DOT-approved U.S. trustee.=0A GET QUOTES=
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Our investors have made key changes to the company that we feel demonstrabl=
y address DOT's concerns so that we can get our airline up and flying as so=
on as possible," said Fred Reid, chief executive of Virgin America, in a st=
atement.=0AVirgin America is 25% owned by Virgin Group, with the remainder =
controlled by U.S. investors Black Canyon Capital and Cyrus Capital Partner=
s. =0ALate last month, the DOT tentatively denied Virgin America's applicat=
ion, indicating that the proposed low-fare airline would have to increase i=
ts U.S. ownership before launching. See full story. The airline, which is l=
ooking to launch domestic service early in 2007 and would base its operatio=
ns at San Francisco International Airport, was given 14 calendar days to fi=
le an objection. =0AWednesday evening, Virgin America reiterated its belief=
 that its structure complies with U.S. law.=0A"The airline is, and will rem=
ain, a U.S.-owned and controlled company that meets all U.S. citizenship re=
quirements," according to a statement.=0AOther changes include Virgin Group=
 agreeing to relax certain trademark license terms to demonstrate that Virg=
in America is free to fly with or without the Virgin brand name, and giving=
 up veto or consent rights regarding various aspects of Virgin America's op=
erations.=0AAlso, Cyrus Capital and Black Canyon, will limit investors to o=
nly U.S. citizens, and Virgin America's U.S. investors have agreed to inves=
t another $20 million in the airline.=0AAlso, Virgin America's board would =
go as far as removing Reid -- tapped in 2005 to be CEO -- if the DOT requir=
es that step.=0A=0ARuth Mantell is a MarketWatch reporter based in San Fran=
cisco.

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