The president of Delta Air Lines, Frederick Reid, said on Friday that he was joining the Virgin Group and would oversee the low-fare carrier that Sir Richard Branson hopes to start in the US next year.
Reid's departure from Delta, which will be effective on April 1, was widely rumored for the last several weeks. But the future of the carrier he is joining is by no means certain.
Federal law prohibits foreign owners from holding a majority stake in airlines that operate domestic routes. In addition, foreign owners can hold only 24.9 percent of a carrier's voting rights. Thus, to begin operations, Branson must find American investors to take a 51 percent stake, a search that has been under way for months.
Nonetheless, Virgin USA, the group's American arm, said on Friday that the new discount carrier planned to begin operating in the first quarter of 2005, becoming the latest in the Virgin family of airlines. Virgin Atlantic Airways flies from several American cities to Europe, while Virgin Blue, another discount carrier, operates in Australia.
Virgin, with its typical flair, has been publicly contemplating where to base its new airline, prompting a flurry of offers from interested cities. It has narrowed the contenders to Boston, Washington and San Francisco and said it planned an announcement soon.
Presumably that will come after Reid jumps aboard. "Fred will best position the airline to succeed in a competitive but poorly served market," Frances Farrow, chief executive of Virgin USA, said in a statement from the airline.
The yet-unnamed Virgin airline will be the latest competitor in an increasingly crowded field of new airlines, all offering low fares. Collectively, low-fare airlines carried about one-quarter of the passengers in the US who flew last year, according to the Transportation Department.
The appointment of Reid is yet another personnel move for Delta, which is in financial straits. The airline, based in Atlanta, has lost US$3.2 billion over the last two years, and it is in difficult negotiations with its pilots union, which it is pressing for deep cuts in wages and benefits.
Delta has changed its three top executives in the last four months. Last November, Delta announced the departure of its chief executive, Leo Mullin, who also served as its chairman.
Delta divided his duties between two board members: Gerald Grinstein, 71, a longtime industry executive, was named chief executive, and John Smith, 65, the former chief executive of General Motors, was named chairman. In making the appointments, Delta bypassed Reid, who had been thought to be the heir to Mullin.
No successor was named for Reid, a longtime industry executive who joined Delta in 1998 as its chief marketing officer. While there, he oversaw the development of Song, Delta's low-fare airline, which began flights a year ago next month.
Earlier this winter, Delta's aggressive plans to expand Song were put on hold while Grinstein conducts a review of Delta operations. Song officials say the airline has met its first-year goals.
But industry analysts question whether the carrier, which concentrates on the East Coast, is a viable strategy in the face of aggressive low-fare airlines like Southwest Airlines and JetBlue Airways.
DECOUPLING? In a sign of deeper US-China technology decoupling, Apple has held initial talks about using Baidu’s generative AI technology in its iPhones, the Wall Street Journal said China has introduced guidelines to phase out US microprocessors from Intel Corp and Advanced Micro Devices Inc (AMD) from government PCs and servers, the Financial Times reported yesterday. The procurement guidance also seeks to sideline Microsoft Corp’s Windows operating system and foreign-made database software in favor of domestic options, the report said. Chinese officials have begun following the guidelines, which were unveiled in December last year, the report said. They order government agencies above the township level to include criteria requiring “safe and reliable” processors and operating systems when making purchases, the newspaper said. The US has been aiming to boost domestic semiconductor
Nvidia Corp earned its US$2.2 trillion market cap by producing artificial intelligence (AI) chips that have become the lifeblood powering the new era of generative AI developers from start-ups to Microsoft Corp, OpenAI and Google parent Alphabet Inc. Almost as important to its hardware is the company’s nearly 20 years’ worth of computer code, which helps make competition with the company nearly impossible. More than 4 million global developers rely on Nvidia’s CUDA software platform to build AI and other apps. Now a coalition of tech companies that includes Qualcomm Inc, Google and Intel Corp plans to loosen Nvidia’s chokehold by going
ENERGY IMPACT: The electricity rate hike is expected to add about NT$4 billion to TSMC’s electricity bill a year and cut its annual earnings per share by about NT$0.154 Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) has left its long-term gross margin target unchanged despite the government deciding on Friday to raise electricity rates. One of the heaviest power consuming manufacturers in Taiwan, TSMC said it always respects the government’s energy policy and would continue to operate its fabs by making efforts in energy conservation. The chipmaker said it has left a long-term goal of more than 53 percent in gross margin unchanged. The Ministry of Economic Affairs concluded a power rate evaluation meeting on Friday, announcing electricity tariffs would go up by 11 percent on average to about NT$3.4518 per kilowatt-hour (kWh)
OPENING ADDRESS: The CEO is to give a speech on the future of high-performance computing and artificial intelligence at the trade show’s opening on June 3, TAITRA said Advanced Micro Devices Inc (AMD) chairperson and chief executive officer Lisa Su (蘇姿丰) is to deliver the opening keynote speech at Computex Taipei this year, the event’s organizer said in a statement yesterday. Su is to give a speech on the future of high-performance computing (HPC) in the artificial intelligence (AI) era to open Computex, one of the world’s largest computer and technology trade events, at 9:30am on June 3, the Taiwan External Trade Development Council (TAITRA) said. Su is to explore how AMD and the company’s strategic technology partners are pushing the limits of AI and HPC, from data centers to