Wed, Dec 12, 2012 - Page 15 News List

Delta nearing deal to buy 49 percent stake in Virgin

Reuters, LONDON

A Delta Air Lines commuter jet lands at LaGuardia Airport in New York on Aug. 28. Delta Air Lines Inc is nearing an agreement to buy Singapore Airlines’ 49 percent stake in Virgin Atlantic, and is expected to agree to a transatlantic joint venture with the British carrier, a source said.

Photo: Reuters

Delta Air Lines Inc is nearing an agreement to buy Singapore Airlines’ 49 percent stake in Virgin Atlantic, and is expected to agree to a transatlantic joint venture with the British carrier, a source said.

Meanwhile, chairman of the Virgin group Richard Branson said he planned to keep control of the carrier he set up and said International Airlines Group (IAG) chief executive officer Willie Walsh was misguided for saying the brand would be ditched by Delta.

“Rumors have been spread in the press that I am planning to give up control of Virgin Atlantic and, according to Willie Walsh ... that our brand will soon disappear. This is wishful thinking and totally misguided,” Branson said on Monday.

A source familiar with Branson’s thinking told Reuters that Virgin Atlantic would form a joint venture on transatlantic flights with Delta if the US carrier bought Singapore Airlines’ stake in the British carrier, which Branson set up in 1984.

Delta and Virgin Atlantic’s plan to set up a revenue-sharing deal on flights between Britain and the US would involve code-sharing, allowing both to sell flights on the other airline and share revenues from ticket sales, the source said.

The joint venture could lead to the pair sharing costs and bringing prices and schedules into line, the source said.

Delta could pay US$300 million to US$500 million for the 49 percent stake in Virgin, Bloomberg reported on Monday citing people familiar with the matter. Singapore Airlines bought 49 percent of Virgin Atlantic for £S600 million (US$962 million) in 1999, but has been open to selling its stake since the middle of last year when a price of US$500 million to US$600 million was mooted in markets, a banking source familiar with the talks said at the time.

Walsh, chief executive of IAG, told the Daily Telegraph newspaper that Delta’s main interest in Virgin Atlantic was in its lucrative slots at London’s Heathrow airport and the US carrier would not want to keep the Virgin brand.

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