Virgin America, the US airline founded by Sir Richard Branson, is near an agreement with its investors to inject additional cash into the fledgling carrier to fund its operations and expansion plans.
While the airline remains in discussions with potential investors and lenders, people familiar with Virgin America’s plans said the San Francisco-based carrier is seeking less than the $100m it raised earlier this year.
Virgin America opened for business last year after a long battle in Washington over its right to operate domestic flights and the precise role of Sir Richard in managing it.
Less is known about the airline, a privately held company that has petitioned transportation officials to withhold key operational data from the public, than most of its peers.
The lack of transparency has fuelled rumours that the carrier has struggled to lure enough passengers to stay in business.
Sir Richard’s Virgin Group, which owns a minority stake in Virgin America, will grant its sister company a loan, the people said.
Black Canyon and Cyrus Capital Partners, the US private-equity firms that hold the remaining 75 per cent in Virgin America, may also provide additional funds. And the carrier is exploring options for financing its fleet of aircraft.
“We’re going to be very supportive,” Robert Nisi, chief operating officer at Cyrus Capital, told the Financial Times.
He declined to specify how much his firm intended to invest.
Mr Nisi, who is also a Virgin America director, said the carrier is now filling more than 80 per cent of its available seats, and should turn a profit by the second half of next year.
Spokespeople for Virgin Group and Virgin American declined to comment.
US regulations prevent a foreign company or investor from owning more than 25 per cent of a US airline’s voting shares.
Virgin America will not be the first US carrier to bolster its cash in recent weeks in the face of a looming industrywide slowdown.
While a recent dip in fuel costs will help prop up most carriers’ short-term results, the effects of the credit crisis on demand for air travel are not yet known.
United Airlines financed aircraft and sold some assets this week, raising $275m, while American Airlines, the world’s biggest carrier, recently tapped a $255m credit line.
“Everybody needs money,” Mr Nisi said. “We’re no different.”
Additional reporting by Kevin Done in London
