Branson {Virgin USA} woos Delta chief for US carrier

mpenguin1

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Branson woos Delta chief for US carrier
By Caroline Daniel in Chicago

Published: February 22 2004 22:33 | Last Updated: February 22 2004 22:33
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Sir Richard Branson is in final discussions with Fred Reid (pictured), president and chief operating officer of Delta Airlines, about the vacant post of chief executive of Virgin USA, the British entrepreneur's new low-cost carrier.

The appointment of such a senior figure in the US airline industry, once tipped as the next chief executive of Delta, would be a coup for Sir Richard, who has been keen to set up a US airline for the past five years.

It is also an indication of how far momentum in the US is moving from legacy airlines to low-cost carriers. Virgin USA could begin operations early next year.

The talks, which are understood to centre on contract terms, began in December after Mr Reid, 53, was passed over as chief executive of Delta when Leo Mullin resigned abruptly. The job went to Gerald Grinstein, a 72-year-old airline veteran and Delta board member. Mr Reid could leave Delta as early as April 15th, according to people familiar with the situation.

Mr Reid has considerable experience in the airline industry. He joined Delta in 1988 as head of marketing and became president and chief operating officer in May 2001. Before joining Delta he was the first American to lead a big non-US airline, serving as president of Lufthansa when the airline was privatised.

His international expertise, especially in forging airline alliances, could be useful to Sir Richard in knitting together his global airline assets, which include Virgin Blue in Australia and Virgin Atlantic.

Virgin declined to comment on the appointment. Virgin USA, which is expected to make an announcement within the next month, is also deciding between San Francisco, Boston and Washington as the location for its headquarters.

However, there is considerable uncertainty about the business model because the US is already a highly competitive market. There are also concerns about the ownership structure. Under current regulations, Sir Richard cannot control a US airline or control a majority stake.
 
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