Richard Branson has already stepped into the aviation industry, but airplanes are not the only mode of transportation that he is interested in conquering. Fortress Investment Group has just funded an intercity passenger train in Florida, and Mr. Branson is going to for this venture. An entire century has passed since a passenger train was built in the United States, but that deficit is about to come to an end.
The new station for the Brightline train was the setting for a meeting between Mr. Branson and Fortress Investment Group’s Co-Founder Wes Edens last year. At that time, the two powerhouse moguls discussed Mr. Edens’ ideas about expanding the train so that it is nationwide. It was introduced to the world in May of 2018 and currently serves the Fort Lauderdale, West Palm Beach and Miami areas.
Now that the partnership has begun, the trains have the name “Virgin Trains USA.” The line will also benefit from Virgin’s considerable marketing proficiency for projects that are currently in the works and those that will be introduced in the future.
Fortress Investment Group is betting that travel by train can be revived in this country, and its executives believe that this venture can be highly profitable. Amtrak is currently a monopoly in the U.S., but it receives subsidies from the federal government.
Wes Edens has ideas on how he is going to expand service, and he announced that train service will begin to include Tampa and Orlando. The company will also connect Las Vegas and Southern California, so they plan to begin construction on the infrastructure next year. First, they need to get the approval of the federal government and acquire Xpress West.
Wes Edens stated that the cities of Charlotte, St. Louis, Atlanta, Houston and Dallas are all in line to be included on his new line. He considers this partnership to be a “leap forward” for the company and the region. He stated, “Virgin has built a respected and trusted brand in travel and hospitality. With our shared focus on customer experience, powered by a culture of innovation and disruption, we are well positioned to build on our success.”
Now is the time to expand on trains because the executives have seen that people are not obtaining their drivers’ licenses as often as they were in the past. The rise of companies such as Uber and Lyft are also making it increasingly unnecessary for Americans to own vehicles. There is also the rising cost of auto insurance to add to this equation, so Fortress executives are highly optimistic about the future of train travel. The dangerous atmosphere that drivers who use their cell phones are creating is also a reason that people are less enthusiastic about driving along the public roads.
Virgin’s Future Plans
Virgin will be expanding beyond the travel industries in the coming years as well. Its airline is already present in Florida and Las Vegas, and it also has plans to build a hotel in Las Vegas. The cruise line that it is bringing to the U.S. will operate in Miami. All of this sounds very promising, but it does have the potential to backfire. In the U.K., Virgin and its partner Stagecoach lost their East Coast Mainline franchise when the government took it from them this year because the line did not reach the promised growth targets.
In contrast, Virgin and Stagecoach have done better with the West Coast Mainline franchise, so the line is scheduled to continue until 2019. Although there has been a little trouble, Mr. Edens said that Virgin is a “trusted and respected brand.” He and Fortress will continue to work with Virgin to improve the customer experience and grow into the future.
“this partnership further validates the incredible accomplishments of our team as we challenge conventional wisdom to reinvent train travel in America. Given our shared values and Virgin’s track record, this partnership will help amplify our efforts and growth potential as we seek to expand to new markets.”
An affiliate of Richard Branson’s Virgin Group will invest in Brightline, but Fortress Investment Group is going to continue to be in charge of running the line. The investment will mean that Virgin has a small stake in the company, but this is similar to other deals that the company has formed with others within the United States. An affiliate of Fortress will manage funds for the group that will hold a majority stake in the enterprise.
Brightline will continue to be involved in the day-to-day operations of the line, and it will also be in charge of the line’s strategy, business development and engineering. The line will begin to brand itself as “Virgin Trains USA” in 2019.
According to Patrick Goddard of Brightline, “this partnership further validates the incredible accomplishments of our team as we challenge conventional wisdom to reinvent train travel in America. Given our shared values and Virgin’s track record, this partnership will help amplify our efforts and growth potential as we seek to expand to new markets.”
The Virgin Group has been involved in the rail system in the U.K., so it has a significant amount of experience in this area that can benefit the American line. Virgin Trains is one example of this. The intercity rail system that is currently running in the U.K. has been in existence since 1997. The West Coast Main Line welcomed people on 38 million trips last year.
Virgin trains have been running on the tracks in the U.K. since 1997 where it has been the majority shareholder of the West Coast Main Line. It will remain in that role until September of 2019. At that time, the franchise will be known as the “West Coast Partnership.”
Richard Branson was determined to get into rail in the United States because of the reputation of Brightline. He believed that the increased service he was going to offer the region was going to be highly beneficial to everyone involved. He also believed that Brightline was at the cutting edge of the U.S. rail industry. “We have tried for over a decade to find an opportunity to provide them with that same excellent service experience,” said Mr. Branson. He also stated that Brightline is “the ideal partner for Virgin to work with to alter perceptions and travelling habits across the United States.” The trains will be named for Virgin, but it will be a silent partner that uses its brand to increase ridership of the train.
It has taken seven years for Wes Edens to be able to begin his rail line. According to Mr. Edens, Orlando is the city that is visited more than any other in the U.S. Because it is too far for people to drive to this city and too short for them to take an airplane, Brightline believed that a rail line would be welcome in this area.
SoftBank Purchased Fortress Investment Group
The founder of SoftBank Masayoshi Son recently purchased Fortress Investment Group for $3.3 billion. The Japanese company was involved in telecoms and the internet in the past, but it is on its way to being a major investor in the technology industry. The purchase caused SoftBank’s shares to increase by 0.7 percent and Fortress Investment Group’s shares to increase by 6.5 percent. In after-market trading, the stock continued its climb to $7.78. This was an increase of 25.3 percent.
Fortress Investment Group was established in 1998, and since then, it has become one of the world’s top global investment managers. It currently has $42.1 billion in assets, and it manages the assets of 1,750 private and institutional investors all over the world. The areas it is invested in include real estate, permanent capital investment strategies, private equity and credit. It was created to be a private equity fund, but it is now a diversified, global investment manager.
Wes Edens is the principle and co-chief executive officer of Fortress in New York. Peter Bridger, Jr. is the principle and co-chief executive officer in San Francisco. Randal Nardone is the co-founder and principle in New York.
