Virgin sued for $US300 million

IMAGE DISTRIBUTED FOR VIRGIN MOBILE - Richard Branson, chairman and founder of Virgin Group Ltd., poses for a photo at the 2012 Virgin Mobile FreeFest on Saturday, October 6, 2012 in Columbia, Maryland. (Photo by Paul Morigi / Invision for Virgin Mobile/AP Images)

The former chief executive officer of Norwegian Cruise Line is suing British billionaire Richard Branson and his Virgin Group conglomerate.

The lawsuit claims that Virgin essentially stole his ideas and business plans to enter the lucrative luxury cruise industry by building a pair of state-of-the-art ships capable of carrying 4,200 passengers each.

It was filed on Wednesday in Miami federal court on behalf of Colin Veitch and his VSM Development company, seeks more than $US300 million ($A394 million) in damages and asks a judge to stop London-based Virgin from going forward with its recently announced cruise line.

Veitch’s attorney, Jeff Gutchess of the Bilzin Sumberg firm, said in an interview that Virgin wholeheartedly embraced Veitch’s ideas in early 2011 and then abruptly did an about-face by forcing a costly renegotiation of their partnership terms.

“It was his idea,” Gutchess said.

“He spent a year of his life doing it, and as a result he gets nothing.”

Virgin in December announced the formation of Virgin Cruises, which it intends to sail out of Miami.

It’s one of the newest of Branson’s numerous business ventures, which include airlines, the Virgin Galactic spacecraft, a music label, book publishing, a travel agency, hotels and mobile phone services.

In a statement at the time, Branson promised Virgin Cruises would be different from the current roster of cruise companies.

“We plan to shake up the cruise industry and deliver a holiday that customers will absolutely love,” he said.

According to the lawsuit, the plan was initially brought to Virgin by Veitch, who after analysing the cruise industry concluded that a well-known brand such as Virgin could break into the business profitably by building a pair of so-called “ultra” ships.

These vessels, such as Royal Caribbean International’s “Oasis of the Seas” ship, feature a wide array of on-board attractions and command premium prices.

The May 2011 agreement between Virgin and Veitch estimated that Virgin could make between $US427 million and $US483 million in profits over 10 years if the venture performed as planned.

Under this deal, Veitch would get nothing if the ships were not profitable but stood to make $US315 million if his projections were met.

Veitch, who was Norwegian CEO from 2000 to 2008, obtained financing to build one ship and a commitment from a German shipyard to do the work. It was then, according to his lawsuit, that Virgin changed terms of their deal in such a way that Veitch would become essentially an employee whose share of the profits depended upon Virgin.

“Colin looks at this and says, ‘What the heck?’ I am not an employee here. I am a founder of the business,” Gutchess said.

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norwegian cruise line sir richard branson virgin cruises