While British billionaire Richard Branson is perhaps best known for his ambitious plans for filling the skies with supersonic jets, he recently made headlines by making an investment in a more traditional form of transportation, railroads. Branson is lending the name of his company, Virgin, to the railroads in the United States run by Fortess Investment Group. The new company name will be Virgin Trains USA.
An ambitious plan
Currently, Fortress Investment group operates railroads in Florida, and their operation is going extremely well. Their vision is to take their railway service nationwide, which is a hugely significant development since it will be a private-sector railroad system in a country where government-subsidized Amtrak has long been the dominant intercity railroad company.
Even though millions of Americans ride on intercity trains each year, currently Amtrak is virtually their only option. Amtrak came into existence when the Federal Government consolidated existing railroads from private companies, and the planned Fortress Investment Group system will be the first privately-funded, intercity railway system built in over a century.
With Branson’s backing, Fortress Investment Group plans to first extend their Florida service to Orlando and Tampa and, pending Federal approval, next to Las Vegas and Southern California. Wes Edens, chairman and co-founder of Fortress Investment Group, plans to ultimately add lines to Charlotte, St.Louis, Dallas and other major cities. Read the article about Fortress at The Wall Street Journal.
A winning formula
As far as the new company goes, Fortress Investment Group will operate and manage the railroads while Virgin will have a stake in the company of a few percentage points in return for its investment. Richard Branson said that he is thrilled with the new plan. He noted that he has struck similar deals with other United States firms, and his company Virgin America, which operates on a similar model to the planned railroad system, has been extremely successful.