Virgin America, Inc.

OST-2007-29229 - Exemption or Modification of Order 2007-5-11

September 11, 2007

Petition for an Exemption or Modification

Motion for Confidential Treatment

Virgin America, Inc. respectfully petitions the Department for an exemption from or modification to the requirements of Order 2007-5-11 on the final term for its current Chief Executive Officer. Specifically, Virgin America requests that it be able to convert the three month DOT-permitted consultancy period of Mr. Fred Reid, its CEO, into three months fall time tenure as CEO. This conversion would allow Mr. Reid to remain in his current position as CEO until February 18, 2008, a period of nine months instead of the currently permitted six month period that was to be followed by three months as a consultant.

Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com

Served September 12, 2007

Notice Establishing Answer Period to Petition for an Exemption or Modification

On September 11, 2007, Virgin America Inc., a U.S. certificated air carrier, filed a petition requesting the Department to provide it relief from the condition related to the employment period set forth for Mr. Frederick W. Reid, its Chief Executive Officer. Specifically, Virgin America requested that it be able to convert the three-month consultancy period of Mr. Reid into three full months as CEO of the company. The company requested that we act on its petition by September 17. Based on our review of the applicant’s request, we have decided to give interested parties until noon on September 14 to file answers to Virgin America’s petition, with replies due no later than noon on September 17.

The Department conditioned the effectiveness of Virgin America’s authority to, among other things, it amending its employment contract with Mr. Reid to provide for the termination of his employment with Virgin America as CEO within 180 days of the issuance of the Final Order in this case (i.e., May 18, 2007), and any follow-on consultancy within 90 days following his termination of employment.

By: Todd Homan

OST-2007-29229 - Exemption or Modification of Order 2007-5-11
OST-2005-23307 - Certificate of Public Convenience and Necessity - Interstate Scheduled Passenger

September 14, 2007

Answer of Association of Flight Attendants-CWA | Word

The Association of Flight Attendants-CWA opposes the request for exemption or alternative form of regulatory relief to permit Frederick Reid to continue serving as President of Virgin America.  AFA believes that the Department erroneously concluded that conditions that were placed on the corporate governance of VAI were sufficient to enable Virgin America to qualify for a U.S. air carrier certificate notwithstanding the earlier conclusion that VAI was impermissibly controlled by foreign citizens. An element of that initial adverse determination was that Frederick Reid was tainted by his recruitment and involvement with the Virgin Group. From this request and other recent events, it is evident that Sir Richard Branson and VAI intend to stretch the boundaries beyond what VAI represented to the Department to secure its certificate.

AFA also objects to VAI’s Motion for Confidential Treatment. In this and other pleadings in these proceedings, VAI has asserted confidentiality for statements or documents that contain no trade secrets or only marginally sensitive commercial information. Because VAI has repeatedly abused the procedural rules for confidential treatment, even vague descriptions of the contents of these documents in pleadings and DOT Orders have been veiled in confidentiality that is not merited.

Counsel: Susan Jollie, 703-354-8450, SJollie@verizon.net

OST-2007-29229 - Exemption or Modification of Order 2007-5-11

Served September 14, 2007

Notice Granting Access to Confidential Material | Word

On September 11, 2007, Virgin America Inc., a U.S. certificated air carrier, filed a petition requesting the Department grant it an exemption to, or a modification from, the condition related to the employment period set forth for Mr. Frederick W. Reid, its Chief Executive Officer, together with a Motion under 14 CFR § 302.12 of our regulations seeking confidential treatment for certain information.  The company also requested that we act on its petition by September 17.

On September 14, the Association of Flight Attendants-CWA filed an answer to Virgin America’s petition, objecting to, among other things, Virgin America’s Rule 12 filing.  No other answers were filed by interested parties.

In order to afford AFA-CWA and any other parties to Docket OST-2007-29229 prompt access to the documents, we will grant immediate interim access to all documents covered by the Rule 12 Motion to counsel and outside experts for such parties who file appropriate affidavits with the Department in advance.  Moreover, Parties will be permitted to make copies of the exhibits, at the Dockets facility, for use by persons who have filed confidentiality affidavits.  We also find it appropriate to grant interim access to any subsequent materials that may be filed in this docket under a Rule 12 Motion to counsel and outside experts for parties who file appropriate affidavits with the Department in advance, unless the party filing the Motion objects.

Further, any supplemental comments on the petition in this docket based on the confidential material will be due no later than noon on September 17.

By: Todd Homan

September 17, 2007

Reply of Virgin America to Answer of Association of Flight Attendants-CWA

AFA-CWA’s Answer reaches beyond the scope of Virgin America’s Petition by asking the Department to re-visit the merits of its Final Order. Suggestions that the Department “erroneously concluded that conditions that were placed on the corporate governance of VAI were sufficient to enable Virgin America to qualify for a U.S. air carrier certificate,” are not at issue in this Docket. To the extent permitted, any substantive review of the Department's Order will take place in the Court of Appeals on AFA-CWA’s petition for review based on the considerable record upon which the agency based its decision, which included over 15,000 docket submissions.

In an attempt to support its review on the merits of the Department's Final Order, AFA-CWA cites to a Comedy Central interview of Richard Branson. For purposes of the instant Petition to simply convert the three month consultancy to a completed CEO term, the Department should ignore non-evidentiary, after-the-fact loose characterizations made on cable comedy shows that end in water fights.

AFA-CWA’s argument that the conversion of Mr. Reid’s three month consultancy into a continuation of his term as CEO would “allow impermissible foreign air carrier influence to drag on” is unfounded. The conditions placed upon Virgin America’s certificate, which include extensive limitation on minority investor rights, ensure that the carrier will remain firmly under the control of U.S. citizen investors. Virgin America seeks a reasonable and modest three-month extension to allow retention of the best qualified successor CEO possible. This need was further substantiated in the Affidavit of Donald Carty, the Chairman of the Board of Directors, filed with Virgin America’s petition. As AFA-CWA is well aware, Virgin America’s request is not without precedent, as the Department has modified or lifted conditions on several other certificated carriers while ensuring continuing compliance with citizenship or ongoing fitness requirements.

Virgin America respectfully requests that the Department: (1) grant it the requested relief from the condition related to the employment period permitted for its CEO Fred Reid; and (2) afford it confidential treatment for designated portions of its petition as requested in its previous motion.

Counsel: Pillsbury Winthrop, Kenneth Quinn, 202-663-8000, kquinn@pillsburylaw.com

Order 2007-9-18
OST-2007-29229 - Exemption or Modification of Order 2007-5-11

Issued and Served September 18, 2007

Order Granting Exemption

By this order, we exempt Virgin America Inc. from the condition in Order 2007-5-11, issued May 18, 2007, limiting the employment of Mr. Frederick W. Reid as the company’s Chief Executive Officer to no more than 180 days from the issuance of that order, to the extent necessary to permit Mr. Reid to remain as CEO for an additional 90 days, that is, until February 18, 2008. The grant of this exemption, however, does not extend the overall period in which Mr. Reid may remain employed by and/or involved in Virgin America. Our decision simply permits Mr. Reid to serve as the company’s CEO for 9 full months in lieu of 6 months of him serving as CEO and 3 months as a consultant as set forth Order 2007-5-11. After such time, Mr. Reid may no longer be employed by Virgin America in any capacity.

By: Andrew Steinberg