Delta has confirmed it is to purchase Singapore Airlines’ 49 per cent stake in Virgin Atlantic for US$360 million.
The move will see the two carriers form a transatlantic joint venture, with a combined network of up to 31 daily round trip flights between the UK and North America, and nine daily round trip flights between Heathrow and New York Newark.
Customers will benefit from reciprocal frequent flyer benefits, including shared access to Delta Sky Club and Virgin Atlantic Clubhouse lounges.
Sir Richard Branson will retain a 51 per cent stake in Virgin Atlantic, with the carrier retaining its brand and operating certificate.
The carrier will now have to apply for antitrust immunity for the joint venture, with this and Delta’s share purchase in Virgin Atlantic expected to be implemented by the end of 2013.
Commenting on the news 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. That is why our customers love us so much. We will retain that independent spirit but move forward in a strengthened partnership with Delta.”
Virgin’s CEO Steve Ridgway said that the deal would “deliver much more effective competition at Heathrow”, and added that the carriers were “confident that the Department of Transportation will be as convinced as we are of the extensive consumer benefits arising from this joint venture, with expedited approval being granted by the end of 2013”.
BA, American Airlines and Iberia formed a joint venture on transatlantic services in 2010, creating what they referred to as a "transatlantic shuttle service between the top US-UK routes".
Earlier this week IAG's CEO Willie Walsh suggested that the Virgin Atlantic brand might disappear if Delta purchased a stake in the carrier (see online news December 10).
Branson responded by challenging BA to a £1 million bet on the subject, to which Walsh retorted that he would prefer to wager "a knee in the groin".
Singapore Airlines has also released a statement on the sale of its stake in Virgin Atlantic, as follows:
"Singapore Airlines has agreed to sell its 49 per cent stake in Virgin Atlantic Ltd to Delta Air Lines.
"Under the agreement, Delta will pay US$360 million in cash for Singapore Airlines’ entire shareholding in the UK-based airline group.
"The agreement is subject to regulatory approvals being obtained in Europe and the United States. Subject to these approvals being secured, the transaction is expected to close in the fourth quarter of the 2013 calendar year.
"Singapore Airlines acquired 49 per cent of Virgin Atlantic in March 2000. The Airline had been evaluating strategic options for the stake for some time, as the investment has not performed to expectations and the synergies the parties originally hoped for have not materialised.
"The successful completion of the sale will result in a profit being booked in Singapore Airlines’ accounts.
"Commercial arrangements between Singapore Airlines and Virgin Atlantic, encompassing codesharing, frequent-flyer programme ties and reciprocal lounge access, are expected to remain in place after the divestment."
Report by Mark Caswell