Frederick Reid, passed over for the chief executive post at Delta Air Lines Inc., will leave the company in April to head a low-cost U.S. carrier that Virgin Group Ltd. plans to start in early 2005.
Delta said Chief Executive Gerald Grinstein will assume Reid’s duties as president and chief operating officer on April 1. Grinstein took over as CEO in November when Leo Mullin quit the post.
Reid has held various management positions in the U.S. and Europe, at Pan American World Airways, American Airlines, Lufthansa Airlines and Delta.
“Looking ahead, Delta has great talent and a deep bench, which we will use to fill in behind Fred,” Grinstein said.
One possible successor, according to industry sources, is Chief Financial Officer Michele Burns, one of the few women in top airline management.
The low-fare airline planned by Virgin, which is controlled by British entrepreneur Richard Branson, will add to the competition in that sector, which includes pioneer Southwest Airlines Co. and relative newcomer JetBlue Airways Corp. It is one of the few segments of the aviation industry that has made money since the Sept. 11, 2001, terrorist attacks.
Even the big airlines are getting in the game with lower-cost units. Last month, United Airlines’ Ted took flight, and last year Delta launched Song, which analysts said Reid helped get off the ground.
“Branson’s talent is marketing his ventures,” said Phil Roberts, a San Francisco-based airline consultant at Unisys R2A Transportation Management Consultants. “Fred Reid adds to that and gives them some credibility in the U.S market.”
Reid will oversee the new airline’s “certification process” with the Federal Aviation Administration, said Will Whitehorn, a Virgin Group spokesman.
In November, Branson said Virgin Group and its partners may invest about $200 million to set up the airline.
He said at that time that Virgin Group will own 49 percent of the carrier and hold 25 percent of voting rights and that it was in talks with “three or four” possible airline and venture-capital partners to own the other 51 percent.
Details of the fleet and the location of the headquarters of the new airline will be announced in “the next few weeks,” Whitehorn said Friday.
Antonio Hofbauer, corporate development manager for Virgin USA, told Reuters that the airline is conducting a “beauty pageant” with various cities to get the best deal. On the list are Boston, San Francisco and Washington.
