Delta to take stake in Virgin
Delta Air Lines has confirmed it wants to take a 49% stake in Virgin Atlantic for $360 million.
The stake is currently owned by Singapore Airlines.
Virgin Group and Sir Richard Branson will retain a majority 51% stake and say Virgin Atlantic will retain its brand and operating certificate.
Under the proposed deal, the two airlines will share the costs and revenues from all joint venture flights.
The airlines claim the move is also good news for corporate and travel agency customers because they “will benefit from an aligned sales effort on both sides of the Atlantic”.
The airlines will file an application with the U.S. Department of Transportation for antitrust immunity.
The transaction will have to get approval from the U.S. Department of Justice, the European Union’s competition regulator and other relevant authorities.
The share purchase and the joint venture are expected to be implemented by the end of 2013.
Virgin Atlantic’s chief executive Steve Ridgway, who is due to retire in spring 2013, said both airlines are confident that the Department of Transportation will approve the deal.
“The trans-Atlantic market is Virgin Atlantic’s heartland – it’s where we started. By aligning with Delta we can continue to grow our North American network and offer greatly enhanced connectivity across the USA,” he said.
President Sir Richard Branson added: “This signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business. I truly look forward to the possibilities our partnership with Delta will offer.
“We have always been known for our innovation and service and have punched above our weight for 28 years. That is why our customers love us so much. We will retain that independent spirit but move forward in a strengthened partnership with Delta.”
The airlines say the partnership allows them to overcome slot constraints, which have limited their growth and competitive capability.
The two carriers will operate a total of 31 peak-day round-trip flights between the UK and North America, 23 of which operate at London Heathrow.
by Bev Fearis, Editor TravelMole UK
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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