Virgin Atlantic boss confident on post-Brexit flying rights

(Recasts, adds CEO comments)

By Sarah Young

LONDON, March 7 (Reuters) - Virgin Atlantic's chief executive said he was confident a deal would be done to secure Britain's flying rights after Brexit, as the airline launched an extra legroom economy seat to try to stand out from the crowd amid intense competition.

British airlines want to be able to continue to benefit from European Union flying rights after Brexit, and the British government has said it will try to secure an open-access deal, but a recent Financial Times report suggested the UK was encountering problems in its negotiations.

Craig Kreeger, the CEO of Virgin, which primarily flies between the UK and North America, said he believed Britain would secure a deal similar to what it already has under the European Union-United States Open Skies agreement.

"I’ve heard from both governments, I remain completely confident that we’re on track, to work, through whatever it takes to have, to be able to fly, in an Open Skies-like way," he said in an interview with Reuters.

Kreeger was speaking as Virgin Atlantic on Wednesday announced that it would refit the cabins of its Boeing (NYSE: BA - news) 787 Dreamliners to offer a new type of economy seat with legroom of 34 inches (86 cms), bigger than the 31 inch economy offering.

Virgin also said it would offer an "economy light" ticket which excludes checked luggage.

It gave no information about ticket prices, with the new seats not available for sale until Spring.

The new offering comes amid tough competition on the trans-Atlantic (Shanghai: 600558.SS - news) route, with low-cost carriers such as Norwegian Air Shuttle, Canada's Westjet and Iceland's Wow Air all stepping up expansion between North America and Europe.

"There isn't any question that trans-Atlantic flying has been changing over the last few years and being able to offer a new lower fare is something we think will enhance our ability to compete," Kreeger said.

IAG, the owner of Virgin's old rival British Airways, is also in on the action, launching a low-cost long-haul unit called Level last year, while Lufthansa has been expanding its Eurowings brand, and U.S. carriers have introduced fares that don't include baggage or seat selection.

Virgin said the refitting of its cabins was underway and the cost of taking out six seats to make space for the new bigger leg room economy class was "not material".

The new 34-inch legroom seat on Virgin will give passengers an option in between economy and Virgin's premium economy seat.

British Airways and Norwegian also offer economy seats with 31 inches of legroom. Both British Airways and Virgin offer legroom of 38 inches in their premium economy, while Norwegian's premium cabin has legroom of between 43 and 46 inches.

Last year, Virgin Atlantic said Air France-KLM (LSE: 0LN7.L - news) would buy 31 percent of the airline from Richard Branson's Virgin Group, making it the second largest shareholder after U.S. airline Delta, which owns a 49 percent stake, and reducing Virgin Group's stake to 20 percent. That deal has not yet completed. ($1 = 0.7206 pounds) (Reporting by Sarah Young Editing by Adrian Croft and Alexander Smith)