Delta flirts with buying a stake in Virgin Atlantic

Stephen Beard Dec 3, 2012
HTML EMBED:
COPY

Delta flirts with buying a stake in Virgin Atlantic

Stephen Beard Dec 3, 2012
HTML EMBED:
COPY

America’s biggest airline, Delta, is reported to be bidding for a big stake in Sir Richard Branson’s Virgin Atlantic. The deal could lead to Branson giving up control of the carrier he founded.

The British entrepreneur sold 49 percent of Virgin to Singapore Airlines in 1999, and it is this stake which Delta is said to be trying to buy.

The purchase makes good commercial sense. Delta would gain an even bigger presence across the North Atlantic — the world’s most lucrative route.

The deal raises the intriguing possibility that Branson may also be prepared to sell his controlling 51 percent share of Virgin. He has been under intense competitive pressure for years. His relatively small carrier does not belong to any of the three big global alliances that now dominate transatlantic air travel, and it is suffering as a result.

Andrew Parker, an aerospace correspondent with the Financial Times, says Branson may need to throw in his lot with a much bigger airline, however much of a wrench that may be.

“The fact that he’s willing to potentially give up control of this much beloved asset tells you the predicament they’re in right now,” Parker points out.

As a non European carrier Delta would not, under EU rules, be able to buy the whole of Virgin. But Delta’s European partner in the Sky Team alliance, Air France-KLM, would be allowed to take a controlling stake.

As a nonprofit news organization, our future depends on listeners like you who believe in the power of public service journalism.

Your investment in Marketplace helps us remain paywall-free and ensures everyone has access to trustworthy, unbiased news and information, regardless of their ability to pay.

Donate today — in any amount — to become a Marketplace Investor. Now more than ever, your commitment makes a difference.