Virgin Group is to retain a 51 per cent controlling stake in Virgin Atlantic, under new plans announced by founder Sir Richard Branson.
The group had been set to sell a 31 per cent stake in the carrier to Air France KLM, under an agreement reached back in 2017.
This move has now been scrapped (subject to contract), with Delta retaining its 49 per cent share in Virgin Atlantic, and the Virgin Group keeping its controlling 51 per cent holding. An extended joint venture partnership between Virgin, Delta and Air France KLM will however still go ahead.
In a letter sent to Virgin Atlantic and Virgin Holidays employees, Branson said:
“I have always viewed Virgin Atlantic as one of my children, born 35 years ago around the same time as Holly and Sam, with one second-hand 747 taking on established airlines such as British Airways, American Airlines, Pan AM, and TWA to name a few.
“Back in 2008, when BA tried effectively to merge with American Airlines, we fought the merger on behalf of our airline and our customers’ interests, with the ‘No Way BA/AA’ campaign on the side of our planes. Surviving against BA on its own was a struggle. But against the combined might of BA/AA, it would have been an impossibility.
“When competition authorities did somehow wave through the BA/AA partnership, we looked for a strong alliance of our own, to protect our wonderful ‘child’ for years to come. We needed to rely on sibling power!
“Remarkably, the most impressive of the large airlines, Delta, was there to form an alliance with us. And they have been the best partners we could have wished for. That still left our family in control and owning the airline. But with BA’s clout in Europe we needed further partners to provide feed for the Virgin Atlantic network, and discussions started with Air France-KLM. Agreement in principle was reached in May 2017.
“To get the deal done, we initially thought our family would need to reduce its shareholding in Virgin Atlantic. I was willing to do so, reluctantly, to guarantee the long-term success of Virgin Atlantic.
“I’m delighted to say the tie-up was approved by various competition authorities, the last of these being the US Department of Transport, who gave antitrust immunity to the new joint venture on November 21st, 2019. Importantly following this news, we have agreed (subject to contract) with our new joint venture partners, that our family will continue to hold the 51 per cent of Virgin Atlantic shares we own. We’ll also continue to work extremely closely with our partners investing together in a thriving airline and holiday company.”
The move follows the purchase of Flybe by a Virgin Atlantic-led consortium earlier this year – the regional carrier is set to be rebranded as Virgin Connect, and according to Virgin will offer “more choice for customers through improved connectivity between UK regional airports and Virgin Atlantic’s extensive long-haul network, particularly at London Heathrow and Manchester”.
Virgin Atlantic also took delivery of its first A350 aircraft in August, featuring a brand new Upper Class suite, and the carrier recently launched a new service to Tel Aviv.
“As we enter 2020, the 50th birthday year for the Virgin Group, there is more excitement ahead, with the launch of our first South American route to Sao Paulo,” said Branson. “And as well as expanding our partnership with Delta, Air France and KLM, we’ll see more red planes flying around Britain, as Virgin Connect starts flying under the Virgin brand.”
Branson also said that the carrier would “continue to be vocal throughout 2020 with our ‘Two Flag Carriers’ campaign, urging ministers to grasp the once in a generation opportunity to shake up the status quo at Heathrow”.
