Delta Air bags 49% stake in Virgin
Kari Lundgren and Mary Jane Credeur London and Atlanta
Delta Air Lines agreed to buy the 49 percent stake in Richard Branson’s Virgin Atlantic Airways held by Singapore Airlines for $360 million (R3.1 billion) to boost its share of the lucrative transatlantic travel market.
Delta and Virgin Atlantic, the biggest long-haul rival to British Airways at London’s Heathrow airport, would also begin a joint venture on 31 round-trip daily flights between the UK and North America, the firms said yesterday.
The deal positions Atlanta-based Delta to grab a bigger slice of the world’s biggest market for premium passengers.
While Virgin’s Branson will retain control, it also marks the end of a go-it-alone strategy for a company that the 62-year-old UK billionaire founded almost three decades ago.
Singapore Airlines said it had been evaluating the position for some time and that an investment in Virgin spanning more than a decade “has not performed to expectations and the synergies the parties originally hoped for have not materialised”.
Delta and Virgin Atlantic said they would seek antitrust immunity from regulators, which would allow them to co-ordinate schedules and pricing and share costs and revenues from joint-venture flights regardless of whose plane operated the route.
Nine daily flights covered by the agreement will be from Heathrow to New York’s John F Kennedy International Airport and New Jersey’s Newark Liberty International Airport,.
The Virgin brand will be retained and Branson said that the deal “signals the start of a new era of expansion, financial growth as well as many opportunities”. – Bloomberg