Branson says Virgin will not fall

By Kyle Peterson

CHICAGO (Reuters) - Some U.S. airlines are in danger of going bankrupt amid painfully high oil prices and a looming economic recession, but low-cost, high-service start-up Virgin America will survive, Richard Branson, head of Virgin Group VA.UL, said on Thursday.

The high percentage of empty seats on Virgin America's planes is no cause for alarm given the airline launched just eight months ago, the British entrepreneur told reporters in Chicago.

"They're doing well ahead of budget and we're very happy with the performance," Branson said.

He added that airlines often forecast it will take up to five years to fill planes on new routes. But Virgin America will not take that long to achieve load factors more in line with the industry, he said. Carriers routinely report load factors of 80 percent or higher.

Virgin America was founded by Branson and partly bankrolled by Virgin Group. The carrier, which launched in the United States in August, aims to serve transcontinental markets and large airports.

Despite its close association with Branson, Virgin Group owns only 25 percent of Virgin America because U.S. law blocks foreigners from owning a larger share of a U.S. airline.

The outlook was good for the carrier when it launched in August, but fuel prices have skyrocketed since then, forcing the failures of four niche airlines last week -- Aloha Airlines, Champion Air, ATA Airlines and Skybus Airlines.

Some experts wonder if larger low-cost airlines such as Virgin America could buckle under the pressure as well. Avondale Partners analyst Bob McAdoo said in a research note on Monday that the privately held carrier may be the next to fall.