Branson to start US airline

SIR Richard Branson is planning a low-cost airline for American business travellers. He has set up a top-level team in New York headed by his legal adviser, Frances Farrow. The team has been told Branson wants to launch the service early next year on the East Coast.

Negotiations are taking place with Boeing and Airbus to buy eight planes.

The Virgin boss is sounding out partners because American law allows him to own only 49% of an airline. He intends to use some of the proceeds from the float of Virgin Blue in Australia, expected early next year, to fund the new operation. Branson reckons it will cost £100 million.

Though low-cost, it will not be a no-frills service, so avoiding competition with airlines such as South West. But Branson intends to use his experience of running airlines in Europe and Australia to keep his spending down.

The plan is to start the operation from scratch, but Branson would consider joining forces with an existing airline if it had slots available.

His spokesman said: 'It is much easier to start with your own airline than buy an existing service with all its debts and agreements.'