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Alaska Airlines, Branson clash over licensing fees

Alaska Airlines, Branson clash over licensing fees

Old Mar 29, 17, 4:56 pm
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Post Alaska Airlines, Branson clash over licensing fees

DALLAS (AP) Alaska Airlines could be headed toward a showdown with Richard Branson over millions of dollars in licensing fees.

Alaska took control of Virgin America last year. Branson, the British billionaire who helped create Virgin America, told reporters in Seattle this week that Alaska must pay royalties for the Virgin name under a licensing deal that runs until 2040.
http://www.seattletimes.com/business...icensing-fees/

interesting article well worth reading. One interesting tidbit is that Virgin America paid $7.7 million in licensing fees in the full year before the Alaska takeover, and that this particular fee may have been heading for $10 million.
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Old Mar 29, 17, 5:03 pm
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He's a complete blow hard, a$$ clown, tool. A Rich one, but still.
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Old Mar 29, 17, 6:22 pm
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...and he has a really weird obsession with virginity.
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Old Mar 29, 17, 6:58 pm
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Originally Posted by flyupfrnt View Post
He's a complete blow hard, a$$ clown, tool. A Rich one, but still.
Congrats on getting one thing right. He is rich.
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Old Mar 29, 17, 9:37 pm
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Originally Posted by tom911 View Post
http://www.seattletimes.com/business...icensing-fees/

interesting article well worth reading. One interesting tidbit is that Virgin America paid $7.7 million in licensing fees in the full year before the Alaska takeover, and that this particular fee may have been heading for $10 million.
The idea that Alaska would be required to keep paying licensing fees for the Virgin name post-merger is so positively Trump-ian that it isn't really worthy of serious conversation. And the assertion that Alaska should value the "Virgin" brand? When it requires a $10 million annual fee to keep, and "Alaska Airlines" is free? What?

Hmmm...
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Old Mar 30, 17, 10:22 am
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All Virgin is is a shell with name licensing and some style guidance - the 3 Virgin airlines are independent companies that have no relationship except the name.

Small sample set but The one time I travelled from Seattle to Sydney on Virgin Australia I could not get Virgin America to check the bags all the way through. Oddly on the way back, they were checked into my Alaska flight. I liked both Virgin Atlantic and Virgin America the couple of times I flew them but VA was always a load more expensive on the same routes.

In his PR tour for Virgin Atlantic opening up Seattle-LHR this week he spent an inordinate amount of time dissing Alaska Air.

/i
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Old Mar 30, 17, 11:02 am
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Originally Posted by selkirks View Post
The idea that Alaska would be required to keep paying licensing fees for the Virgin name post-merger is so positively Trump-ian that it isn't really worthy of serious conversation. And the assertion that Alaska should value the "Virgin" brand? When it requires a $10 million annual fee to keep, and "Alaska Airlines" is free? What?

Hmmm...
It all comes down to what the contract says. VX has a contract to pay the fee through 2040 which AS has now taken over. If there are ways to get out of it that both sides agree to do that, then fine. If not, then the courts will resolve it if it is worth the time and money to do so.
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Old Mar 30, 17, 12:20 pm
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Originally Posted by sfozrhfco View Post
It all comes down to what the contract says. VX has a contract to pay the fee through 2040 which AS has now taken over.
But if Virgin America ceases to exist after 12/31/17 (or whatever that date is), how can you collect royalties/licensing fees?

Will be fun to watch, for sure. And I'm sure the AS exec team and lawyers saw this and know exactly how it'll play out.
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Old Mar 30, 17, 12:20 pm
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I could see Alaska being on the hook until the single operating certificate happens and the Virgin America name ceases to exist, but beyond that, the courts will probably have to decide but when a company ceases to exist how can they be held liable for things beyond that. IANAL so I don't know. Seems the previous owners would be on the hook unless there was something specific in the buyout by Alaska pertaining to this matter.

In the mean time, get out the duct tape and cover the name

Last edited by Baze; Mar 30, 17 at 12:24 pm Reason: fixed typo
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Old Mar 30, 17, 12:23 pm
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Originally Posted by Baze View Post
I could see Alaska being on the hook util the single operating certificate happens
Exactly. The fee is a % of revenue. Once the aircraft and flights are moved over to the Alaska AOC then it will be a % of zero to be paid until 2040.

What SRB is really angling for is for the agreement to be terminated so he can try and use it for another airline.
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Old Mar 30, 17, 1:39 pm
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Originally Posted by ajeleonard View Post
Exactly. The fee is a % of revenue. Once the aircraft and flights are moved over to the Alaska AOC then it will be a % of zero to be paid until 2040.

What SRB is really angling for is for the agreement to be terminated so he can try and use it for another airline.
We don't know what the terms are in the event of an acquisition. They could be spelled out.
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Old Mar 30, 17, 10:22 pm
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Originally Posted by channa View Post
We don't know what the terms are in the event of an acquisition. They could be spelled out.
The secret will come out sooner or later (if there is one). There is no incentive for AS to lie to its shareholders or would this be some secret line on the financial reports?
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Old Mar 31, 17, 1:34 am
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Originally Posted by CDKing View Post
would this be some secret line on the financial reports?
You can bet the M&A team from Alaska saw this on day 1.

My guess is SRB is trying to "pay back" Alaska for being one of the parties that complained vehemently against Virgin America back in 2005/06/07. I can't remember if AS was directly on the initial foreign ownership lawsuit with Continental, but they were definitely involved in trying to prevent VX from starting operations.

Wouldn't be at all surprised if this was related to that whole mess.

Should be fun to watch this one play out!
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Old Mar 31, 17, 8:40 am
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The entity that made the licensing deal will cease to exist. It'll be an interesting and probably expensive negotiation for AS, but in the end SRB has very little to persuade.
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Old Mar 31, 17, 10:43 am
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Agreement is available online

Originally Posted by CDKing View Post
The secret will come out sooner or later (if there is one). There is no incentive for AS to lie to its shareholders or would this be some secret line on the financial reports?
It's not secret...it's publically available. All you need to do is Google virgin america licensing agreement and download the 948 page PDF. It covers Assignment and Termination starting on page 935 - 938.
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