U.S. Gov't Tentatively OKs Virgin Plan

The Transportation Department on Tuesday removed a barrier to fledgling airline Virgin America's plans to start U.S. operations, saying the company was 'back on track' toward complying with laws limiting foreign control of a domestic carrier.

The agency gave a tentative OK to a revised plan filed in January by Burlingame, Calif.-based Virgin America, saying the revised plan 'should meet U.S. ownership rules' that cap foreign control of a U.S. airline at 25 percent. One required change is that Virgin America replace CEO Fred Reid.

In December, the Transportation Department tentatively denied Virgin America's application to fly, mainly because of its ties to British entrepreneur Richard Branson _ the billionaire who came up with the idea for a new U.S. airline that would offer travelers more comfort at a lower cost than the industry's long-established powers. Branson hired Reid.

Several of the major U.S. airlines, including AMR Corp.'s American Airlines, Delta Air Lines Inc. and Continental Airlines Inc., have spearheaded the drive to prevent Virgin America from flying.

Refusing to bow to the resistance, Virgin America in January a long list of concessions to the Transportation Department to allay regulators' concerns. Virgin America's proposed reforms included selling more stock to U.S. investors, eliminating one of the three board seats awarded Branson's Virgin Group and, if necessary, firing Reid.