Release #09.010
March 27, 2009

DOT Must Scrutinize Virgin America’s Citizenship

WASHINGTON – The Air Line Pilots Association, Int’l, (ALPA) called on the U.S. Department of Transportation this week to hold a public inquiry if there has been a significant change in the ownership interests in Virgin America.

“Serious questions exist as to whether Virgin America is a citizen of the United States entitled to hold a certificate to provide air transportation,” said Capt. Paul Rice, ALPA’s first vice-president. “Given that significant changes appear to have occurred among the company’s investors, the American people deserve a public proceeding to determine whether Virgin America satisfies the law.”

On March 23, ALPA filed a response with the U.S. Department of Transportation in support of a petition by Alaska Airlines to institute a public inquiry into the citizenship and control of Virgin America, Inc.

ALPA’s response focuses on news media reports that two U.S. hedge funds have exercised their rights to sell their interests in Virgin America back to the British Virgin Group and that the airline has not found any U.S. investors to replace them. News media reports also indicate that, while the hedge funds no longer have any beneficial interest in Virgin America, they continue to “hold” 75 percent of Virgin America’s voting stock.

“The idea that a hedge fund counts for actual control of a company even if it holds no benefit or risk defies decades of public policy and current law that prohibits foreign control of U.S. airlines,” said Rice. “Virgin America would have us believe that any level of foreign investment in U.S. airlines is acceptable so long as U.S. citizens retain physical possession of the stock certificates and the right to vote 75 percent of an airline’s voting shares. We don’t agree.”

Labor leaders at both Alaska Airlines and Horizon Air, including the ALPA-represented pilots at Alaska Airlines, also have expressed their unqualified support for Alaska Airlines’ petition.

“The Alaska Air Group Labor Coalition, which represents more than 9,000 unionized employees at Alaska Airlines and Horizon Air, believes there is more than enough compelling evidence for a public review of Virgin America’s citizenship status,” said Capt. Sean Cassidy, vice chairman of ALPA’s Alaska Airlines Master Executive Council and a member of the Labor Coalition. “It is critical that the Department of Transportation ensure all domestic carriers fully and openly comply with U.S. law regarding foreign ownership and control. A failure to do so creates an uneven playing field that jeopardizes American jobs.”

A public inquiry on Virgin America’s citizenship status would also reflect the Obama administration’s commitment to transparency. U.S. Attorney General Eric Holder recently underscored this administration’s “fundamental commitment to open government” in a memorandum to all heads of executive departments and agencies.

“ALPA calls on the Department of Transportation to allow public scrutiny of Virgin America’s citizenship and separate fact from fiction when it comes to who is controlling the airline,” Rice concluded.

Founded in 1931, ALPA is the world’s largest pilots union, representing 52,250 pilots at 35 airlines in the United States and Canada.

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ALPA Contacts: Linda Shotwell, 703/481-4440, or Jenn Farrell, ALPA Alaska Airlines MEC, 206-241-3138.