09 Mar Virgin sues US partner over claims about its brand value
Sir Richard Branson’s Virgin Enterprises is suing a US rail company for $251m (£182m) over its decision to drop the Virgin name from its trains.
It had a 20-year licensing deal which allowed Brightline to rebrand as Virgin Trains USA in exchange for royalties.
Virgin claims Brightline is reneging on the agreement by spuriously claiming the Virgin name has been damaged.
The suit said Brightline claimed Virgin is no longer “a brand of international high repute” following the pandemic.
Virgin said it has maintained its status as an internationally reputed brand, and described the allegation that the Virgin brand had been damaged as “cynical and spurious”.
In 2018, Virgin struck the licensing deal with Brightline, which operates a train service between Miami and West Palm beach in Florida, with plans to extend the line to Orlando, the home of Disney World.
Its existing service was suspended in March 2020, and isn’t expected to resume until later this year.
Brightline is also planning a route between Apple Valley, near Los Angeles and Las Vegas.
The train operator first signalled it might scrap the deal in April, when the Covid-19 pandemic hit the Virgin Group’s travel-focused businesses.
Virgin Atlantic airlines cut thousands of jobs as part of a $1.7bn rescue plan.
Mr Branson even offered to use his luxury island resort as collateral to help secure state aid for Virgin Atlantic.
The group also delayed the launch of its first cruise ship, and its gyms and hotels were closed.
Virgin contends that Brightline cannot lawfully scrap the contract until 2023 at the earliest, and even then it would have had to pay an exit fee.
The company is suing for $251.3m, which it claims would cover the royalties it should have received up to this date, plus the early termination fee.