Virgin Atlantic Says Brexit No Threat to U.S.-U.K. `Open Skies'

(Bloomberg) -- Virgin Atlantic Airways Ltd. said it’s “not at all” concerned that Brexit poses a threat to the U.S.-U.K. Open Skies treaty on which European and American carriers rely for unfettered access to trans-Atlantic routes.

Chief Executive Officer Craig Kreeger told Bloomberg he was in Washington last week for talks with representatives of the two governments and “heard enough” from both sides to be sure that reaching an agreement on extending the current liberal arrangements won’t be an issue.

“I am not even remotely worried about the U.S.-U.K. negotiations,” Kreeger said in an interview in London. “I’m very confident that we will find our way to a very nice solution for the U.S.-U.K. bilateral.”

Kreeger spoke following reports that the U.S. has offered Britain a more limited aviation accord than it has as a member of the European Union. The main stumbling block in negotiations is that the federal government is using a template that has less generous terms than the Open Skies deal with the EU, according to people familiar with the matter.

U.K. and U.S. officials aim to resolve the differences and reach agreement soon so that airlines can continue to operate with ease after Britain quits the EU in March, the people said.

Ownership Issue

A potential sticking point is a standard U.S. requirement that foreign airlines be majority owned by citizens of the country where they’re based. Virgin is 51 percent controlled by British founder Richard Branson, but with Air France-KLM Group set to take a major holding his stake is set to drop to 20 percent.

Delta Air Lines Inc. owns 49 percent of Virgin, giving the U.S. carrier an incentive to put its weight behind the conclusion of a deal that retains the status quo or even expands on it.

Negotiations have so far been “positive,” with significant progress, the U.K. Department for Transport said Monday. A State Department official said talks began with the model Open Skies text and included numerous stakeholders, adding that the U.S. is confident a timely agreement can be reached.

Kreeger said he’s far more concerned about the aviation regime likely to result from negotiations between the U.K. and EU, though Crawley, England-based Virgin Atlantic is insulated from any upheaval by the fact that it has no European flights.

To contact the reporter on this story: Christopher Jasper in London at cjasper@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Emma Ross-Thomas

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