Virgin To Be Denied?
- Thread starter X-U
- Start date
As much as my airline (AA) does NOT need another competitor on the transcons, I can't help but feel this is restraint of trade. Where are all the rabid "capitalists" who should be demanding Virgin's right to operate in a free-market environment?
The facts is that Virgin group "officially" controls only 25% of the stock which is perfectly legal under U.S. law. Whether or not the rest is held by U.S. citizens as a subterfuge is of no consequence unless you can prove it.
This same subterfuge has been used countless times by U.S. corporations to circumvent U.S. law by doing business overseas with dummy "corporations" that officially had no ties to the parent U.S. company--that way bribing foreign officials and doing business with Saddam Hussein, Iran, and Syria was not a violation of U.S. law.
The facts is that Virgin group "officially" controls only 25% of the stock which is perfectly legal under U.S. law. Whether or not the rest is held by U.S. citizens as a subterfuge is of no consequence unless you can prove it.
This same subterfuge has been used countless times by U.S. corporations to circumvent U.S. law by doing business overseas with dummy "corporations" that officially had no ties to the parent U.S. company--that way bribing foreign officials and doing business with Saddam Hussein, Iran, and Syria was not a violation of U.S. law.
Ramadan is over and you will not hear a peep of their inconsistencies until after the 'holi-days'………..
oldiebutgoody
Veteran
Just my take, but it sounds like the conflict is in the amount of control, not the amount of ownership. Apparently the branding agreement itself carries some pretty strict guidelines which take a lot of the planning/marketing decisions out of the VA management's hands. If it's this obvious at this point, it sounds like some pretty major restructuring of financial and branding agreements may have to happen before the gov't lets it happen. Sounds like we may be approaching some hard times for start-up airlines, with the legacies and LCCs getting flush with cash, and just ready to stomp anybody that gets in their way.
eolesen
Veteran
- Jul 23, 2003
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Go read the denial order, Jim. The financing behind this would make Enron's accountants blush. In short, most of the investors were Cayman Island corporations, and that failed the U.S. ownership and control test.
There were also serious concerns over the franchising agreement between Virgin Group and VAI, and how much effective control Branson would have as a result.
So, this was indeed not about ownership, but about control, and there's no way Branson's ego would be willing to comply with allowing VX to operate independently.
What's ironic is that the person quoted in all of the media reports on this was a UK based spokesperson, and not someone based at VX's SFO headquarters.
There were also serious concerns over the franchising agreement between Virgin Group and VAI, and how much effective control Branson would have as a result.
So, this was indeed not about ownership, but about control, and there's no way Branson's ego would be willing to comply with allowing VX to operate independently.
What's ironic is that the person quoted in all of the media reports on this was a UK based spokesperson, and not someone based at VX's SFO headquarters.
oldiebutgoody
Veteran
Wow. If that's the case, it's pretty stupid of them.
I also think that the mood in the government right now is to encourage mergers and acquisitions, which is what wall street wants, to reduce capacity. They do not seem to be in favor of more, "new" airlines, especially ones that damage the US airline industry to funnel cash out of the country.
oldiebutgoody
Veteran
If that is truly the government's sentiment, then why are people even looking at mergers or acquisitions in light of the disapproval of the UAL/US deal. There's even been talk that if that deal were attempted today, that it would be approved with flying colors. Note, these are just opinions, but based on what I've been reading they haven't changed. If an operation, like Skybus, meets the letter of the law, then they CAN'T be disapproved. If there's any grey area, the gov't seems inclined to disapprove them. Even VA may get approval once they present all their evidence in the case. Also, based on the movement of LCC stock, it's obvious that Wall Street wants consolidation to happen. Role or not, the government takes positions on these matters all the time.
eolesen
Veteran
- Jul 23, 2003
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As they should. If you haven't put your business plan together in accordance with the law, it should be turned down until you've got your ducks in a row.
I think you're confusing matters (and agencies) a bit.
The DOJ has concerns whenever two existing companies combine. That's to be expected. But I don't think anyone at DOJ or DOT are going to complain when new competition is introduced.
oldiebutgoody
Veteran
In our government, money talks. Also, I wasn't addressing agencies per se, just the attitudes of the current administration. Laws can be interpreted in many ways (if this weren't the case we would need no judicial department), and the attitudes of the government leadership has huge impact on how they are. Those attitudes are frequently influenced by business patterns, industries or companies with ties to Washington.
Former Moderaator, what I said was it's done all the time and you can't do anything about it unless you can prove it. Sounds like the government, for once, did their due diligence, or Branson is a lot dumber than I thought. Any good Halliburton or Enron accountant could have hidden the Cayman Islands connections without even breathing hard. 
By the way, I like your new avatar. Especially, since Outlook Depressed just wiped out all my mail folders. It asked if I wanted to compress the folders in order to free up disk space. Like an idiot, I answered Yes. When the "compression" was done, most of my mail folders, including important documents, were empty. And, no, I don't have disk backup on it. I've been fighting with HP since I bought this new piece of crap about the fact that the CD-RW feature doesn't work.
By the way, I like your new avatar. Especially, since Outlook Depressed just wiped out all my mail folders. It asked if I wanted to compress the folders in order to free up disk space. Like an idiot, I answered Yes. When the "compression" was done, most of my mail folders, including important documents, were empty. And, no, I don't have disk backup on it. I've been fighting with HP since I bought this new piece of crap about the fact that the CD-RW feature doesn't work.
boxer
Veteran
Former Moderaator, what I said was it's done all the time and you can't do anything about it unless you can prove it. Sounds like the government, for once, did their due diligence, or Branson is a lot dumber than I thought. Any good Halliburton or Enron accountant could have hidden the Cayman Islands connections without even breathing hard.
By the way, I like your new avatar. Especially, since Outlook Depressed just wiped out all my mail folders. It asked if I wanted to compress the folders in order to free up disk space. Like an idiot, I answered Yes. When the "compression" was done, most of my mail folders, including important documents, were empty. And, no, I don't have disk backup on it. I've been fighting with HP since I bought this new piece of crap about the fact that the CD-RW feature doesn't work.
Mext time buy a Mac.
