Ex-cruise line CEO sues Virgin, Richard Branson for $300M over plans for new cruise enterprise
The former chief executive officer of Norwegian Cruise Line is suing British billionaire Richard Branson and his Virgin Group conglomerate, claiming 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.
The lawsuit, filed Wednesday in Miami federal court on behalf of Colin Veitch and his VSM Development company, seeks more than $300 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 did not immediately respond to emails seeking comment.
Virgin in December announced the formation of Virgin Cruises, which 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 analyzing 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 $427 million and $483 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 $315 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.
The dispute is a far cry from a 2011 promotional video in which Branson specifically mentioned the partnership with Veitch as he raised a glass of sparkling wine in tribute to the plan.
"We've got talented people at the ready," Branson says on the video, which was transcribed in the lawsuit. "I hope that the next time I raise this glass with you, is to say bon voyage. Cheers."
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