November 27, 2007
Virgin America on Monday named former American Airlines global sales vice president David Cush to succeed Fred Reid as chief executive of the low-cost start-up carrier.
Cush will take over from Reid on December 10, completing a requirement by US transportation regulators that Reid relinquish his post after the company launched service. It did so in August.
Reid said in an interview that Virgin America was not required to clear Cush’s name with regulators but did give the Transportation Department a courtesy “heads up” about his selection.
Reid said a search committee of investors and executives, not including him, did most of the work and settled on Cush, who spent two decades at American where he worked with Reid and Virgin America’s chairman, Donald Carty. Carty is a former chief executive of American.
“This was a professional search,” Reid said.
British entrepreneur Richard Branson’s Virgin Group has branded Virgin America and helped finance its initial operations, prompting unusually close government scrutiny and complaints from industry rivals that Branson’s interests were really in control of the company in violation of US law.
In addition to requiring that Reid step down because of his ties to Branson and the international business community, regulators also required changes in Virgin America’s investment and ownership structure.
Reid and Cush, in a separate interview, said Virgin America has complied with Transportation Department requirements since applying to operate nearly two years ago.
Cush said he took the job with no reservations and he believes the ownership controversy, especially the resistance from his former employer and other carriers, was to be expected. He considers the matter “water under the bridge.”
At American, Cush was responsible for global sales and distribution. He also had senior level experience in operations and alliances.
Robert Mann, an industry consultant, said Cush has vast operational experience and has close ties to Carty. But Mann also noted that Cush comes from the complex world of network carriers.
“This would be new ground for him,” Mann said.
Cush declined to discuss company specifics but said his goals were to grow the customer service focus of Virgin America.
“Doing that will make travel fun again for the passenger,” Cush said.
Reid said Virgin America’s business so far “was quite encouraging” but would not discuss operating specifics. He did say passenger load factor, a measure of paying customers, was in the “normal to high range.”
He also said oil prices nearing USD$100 per barrel is a cost issue that “we can manage” and has so far not affected Virgin America’s business model or its growth plans.
Virgin America, which is not publicly traded, flies 10 Airbus A320s and serves a handful of cities, including its San Francisco base, New York, Washington, Las Vegas and Los Angeles. It plans to add San Diego in February.
Virgin America’s chief competition is JetBlue Airways , which said last month it had felt the effect of new competition on transcontinental business from Virgin America.
(Reuters)