In a powerful combination of UK entrepreneurial drive and US investment capital, Richard Branson and David Bonderman are teaming up to launch the first low-cost startup to strike at the heart of the European Union with substantial foreign ownership. Called Virgin Europe, the new carrier is expected to be based in Brussels.
Branson, the chief executive and founder of Virgin Atlantic Airways, has talked often about the feasibility of starting a low-cost carrier in mainland Europe.
Bonderman heads up two Texas-based investment companies Air Partners and TPG Partners, which have holdings in Continental, of which Bonderman is chairman, as well as America West Airlines and Aeromexico. He worked in equal partnership with Branson earlier this year in the takeover of the MGM cinema chain in the UK and Ireland.
Sources in the US indicate that the new airline will have a startup capital of $100 million, with Branson's Virgin Group taking an undisclosed stake. The remainder of the financing, including Bonderman's involvement, remained unclear at presstime. 'There is good interest and it is not a problem finding partners,' says one source close to Virgin. In accordance with EU law member state nationals must own 51 per cent.
The new airline plans to mimic Southwest's successful short-haul, low-fare strategy and will not fall under Virgin Atlantic's operational control. The fleet selection is still pending, but a single narrow body aircraft type, such as the Boeing 737, Airbus 321 or Fokker 100, is under consideration.
Mead Jennings
Source: Airline Business
