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Delta To Acquire 49% Of Virgin Atlantic

by Robert Lee, Tax-News.com, London

14 December 2012


Singapore Airlines is to sell its 49% stake in Virgin Atlantic to Delta, the US-based airline which wants to expand its presence in the market for transatlantic flights between the United States and London's Heathrow.

The move will allow Delta to secure a greater share of highly-sought-after landing slots at Heathrow from Virgin, which is based at the airport. Delta is facing stronger competition in the trans-Atlantic market following a code-sharing deal between American Airlines and British Airways in 2010.

Delta said the deal would allow the companies to operate 31 peak-day round-trip flights from the United Kingdom and North America, with both airlines sharing the costs and revenues from these routes.

Delta Chief Executive Officer, Richard Anderson commented: "Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the UK, particularly on the New York-London route, which is the largest airline route between the US and Europe."

For Branson, the deal would presumably lead to Virgin Atlantic joining the SkyTeam alliance. After several years of stalling, the Virgin founder said last year that he was considering joining one of the world's airline alliances to boost the company's competitiveness, and reiterated his intention to do so last month.

Singapore Airlines, which paid around GBP600m (USD968m at current exchange rates) for its stake in 1999, settled for a substantial haircut on its investment, accepting a bid of just USD360m. The company instead will look to consolidate its position in the increasingly competitive East Asia and Australasia markets, where it will retain a 10% stake in Virgin Australia.

Virgin Atlantic, which undertook its maiden flight in 1984, operates more than 40 aircraft, comprising Boeing 747, Airbus A340, and Airbus A330-300 aircraft. Virgin Atlantic will take delivery of 15 Dreamliners from 2014 to modernize its fleet and achieve greater operational efficiencies.

Welcoming the tie-up Branson, said: "This is an exciting day in Virgin Atlantic history. It 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. We will retain that independent spirit but move forward in a strengthened partnership with Delta."

TAGS: aviation

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