From San Francisco Business Times
Investors to pump $100 million into Virgin
By Eric Young
Startup airline Virgin America Inc. will receive an additional $100 million from its U.S. and British investors in coming months, the airline said.
The new injection of capital will allow the low-cost carrier to continue hiring and expanding its routes to new cities. The additional money, first reported by the Wall Street Journal, comes on top of about $300 million invested so far by U.S. private equity firms Black Canyon Capital LLC and Cyrus Capital Partners LP and Virgin Group Ltd., the London-based conglomerate run by British billionaire Richard Branson.
Virgin America is receiving a financial boost while the U.S. airline industry is undergoing a new round of financial woes. A number of low-cost carriers, struggling with record-high fuel costs, have gone bankrupt. Frontier Airlines Holdings Inc. last week filed for protection under Chapter 11 in part due to increasing oil costs and a sputtering economy. Other discount carriers, including ATA Airlines Inc. and Aloha Airgroup Inc., recently filed for bankruptcy and discontinued operations.
Backers of Virgin America, based in Burlingame, said the eight-month-old carrier won't meet a similar fate. Branson told reporters last week that he is "extremely pleased" with Virgin America, predicting it will overcome industry challenges that will sink competing carriers. "If you sit here in three or four years time, it'll be flying to all the major American cities," he said.
Privately-held Virgin America is not profitable. The carrier lost $35 million in the quarter ended Sept. 30, 2007, the last period for which figures are available. Company executives said they hope the airline will be profitable within three years.
Virgin America took to the skies in August 2007. It flies to Seattle, San Francisco, Los Angeles, San Diego, Las Vegas, New York and Washington D.C. The company said this year it expects to hire 1,000 people, most of whom will work out of the Burlingame headquarters or as flight staff based at San Francisco International Airport. That would bring the company's head count to 2,000 employees. Meanwhile, the carrier could fly to as many as 12 cities by 2009, it said. |
