Virgin considering a three-way deal

Megan Williams Oct 30, 2008
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Virgin considering a three-way deal

Megan Williams Oct 30, 2008
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Steve Chiotakis: In an economy that’s stuck in the middle seat, the flight pattern for the airline industry seems to be consolidation. And here we go again with a marriage in the heavens. The $2.6 billion deal between Delta and Northwest Airlines is done. The justice department says it won’t block the two getting together to form the world’s biggest airline in terms of traffic. The new Delta will continue to be based in Atlanta.

Taking flight too is Richard Branson, the head of Virgin Atlantic Airline, who’s set his sights on becoming an even bigger player in the sky. Here’s Megan Williams.


Megan Williams: For years, Branson and his Virgin Atlantic airlines have been waiting for a chance to buy smaller British BMI. Problem is, BMI completed a deal yesterday to be controlled Germany’s Lufthansa airlines.

But today’s Wall Street Journal reports on a possible three-way deal among Virgin, BMI and Luftansa. The upshot is Virgin could get local flights in the U.K. and could also form an alliance with Luftansa for international flights.

Virgin says it’s a major opportunity. The airline industry is reeling from high fuel prices and fewer customers. The number of global passengers dropped nearly 3 percent in September — the first decline in five years. A big alliance might just make the difference to Virgin as it navigates through a world economic storm.

I’m Megan Williams for Marketplace.

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