The US government’s rules stopped Richard Branson from stopping Virgin America’s sale

Richard BransonAbraham Caro Marin/APVirgin America founder Richard Branson.

After the announcement of the $4 billion acquisition of Virgin America by Alaska Air, Virgin founder Richard Branson expressed his disappointment in the move, saying there was nothing he could do to prevent it.

“I would be lying if I didn’t admit sadness that our wonderful airline is merging with another,” Branson wrote Monday in a post on Virgin’s website.

“Because I’m not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it.”

According to Department of Transportation regulation, only 25% of an airline based in the US can be owned by a foreign entity or non-US citizen, meaning Branson’s control as a British citizen was limited.

Throughout the post, Branson told the story of how Virgin America, along with its sister companies Virgin Atlantic and Virgin Blue, came to be and the purpose of creating the airline.

“Our US airline, Virgin America, also started out of frustration,” the post said.

“As more airlines consolidated and grew larger and more focused on the bottom line, flying in the US became an awful experience. Despite moves to block our airline from flying, Virgin America began service in August 2007 — with the goal of making flying good again.”

According to Branson, Virgin has attempted to create unique customer experience in the face of an ever-consolidating industry that he said led to the move.

In 2007, when the airline started service, 60 per cent of the industry was consolidated,” Branson wrote. “Today, the four mega airlines control more than 80 per cent of the US market. Consolidation is a trend that sadly cannot be stopped. Likely feeling the same competitive pressures as Virgin America, Alaska Airlines approached Virgin America with a proposal to merge.”

Branson has been a longtime critic of mergers in the industry, such as battles against the alliance of American Airlines and British Airways in 2010 and the merger of American and US Airways in 2013.

Branson went on to compliment the employees of Virgin America, and he stressed that he hoped Alaska Airlines would recognize the value of Virgin America.

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