Sir Richard Branson and his Virgin Group face a lawsuit from a former Norwegian Cruise Line boss, claiming that Virgin stole his ideas and business plans to enter the cruise industry.
Colin Veitch, chief executive of Norwegian from 2000 to 2008, and his VSM Development company, is reportedly seeking more than $300 million in damages.
He has asked a judge to stop Virgin from progressing with its recently announced Miami-based cruise line.
The lawsuit, filed in Miami federal court, alleges Virgin reneged on a May 2011 agreement with Veitch over how estimated profits would be split, the Telegraph reported.
Veitch would get nothing if the 4,200-passenger “ultra” ships were not profitable but could earn $315 million if projections were met.
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 ultra ships, according to the lawsuit.
These vessels, such as Royal Caribbean International’s Oasis of the Seas, feature an array of on-board attractions and command premium prices.
Veitch’s attorney, Jeff Gutchess of the firm Bilzin Sumberg, reportedly said that Virgin wholeheartedly embraced Veitch’s ideas in early 2011 and then demanded a change in the terms of their partnership after an abrupt about-face.
A Virgin spokesman said: “Richard Branson and the Virgin Group first looked at the cruise market in the late 1970s, and our current team has been exploring the opportunity for more than a decade.
“Over the years, we have been in discussions with a number of parties including the plaintiff, and those discussions ceased in 2012. We strongly believe the claim has no merits.”
Sir Richard revealed at the weekend that he is to commission the construction of two ships as part of plans to enter the cruise sector.
The ships are likely to be built in a German or Italian shipyard and will take four to five years to complete, at the cost of around $1.7 billion.
“We’re in the final throes of those negotiations,” Sir Richard said.
Financial backing for Virgin Cruises has been secured from private equity firm Bain Capital. Sir Richard has brought in Tom McAlpine, part of the management team that founded the Disney Cruise Line in 1996, to head the new venture.