Tuesday, 11 December 2012

Delta To Buy Virgin Stake

The US airline, Delta has agreed a super deal to buy the 49% Singapore Airlines' stake in Virgin Atlantic for $360m (£224m).

Virgin Group and Sir Richard Branson will retain a 51% shareholding, and the Virgin brand will remain in place, the new partners said in a joint statement.   Obviously the deal is subject to regulatory approval in both the US and Europe.  Already expected is a challenge from the horrifically immoral Willie Walsh,  boss of IAG group, owners of BA and financially crippled Iberia.    
Mr Walsh offered to wager a "knee in the groin" in a bet with Sir Richard over whether the Virgin brand would still be around in five years.  However Branson, hit back offering a £1million bet offered by Sir Richard on Monday.

Virgin and Delta said the deal would allow allow them to "overcome slot constraints" and offer more flights from Heathrow.  The carriers will operate 31 peak-day round trips between the UK and North America.  "Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the UK, particularly on the New York-London route," said Delta boss Richard Anderson.

Sir Richard said it was an "exciting day" in Virgin's history.  "It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business."  Singapore Airlines says it is selling its stake, which it has owned since 1999, because of increased competition in its local market, where it wants to keep its focus.

Loizos Heracleous, professor of strategy and organization at Warwick Business School, said the airline had always faced this issue and that the move really reflected Singapore Airline's disappointment with its investment.
"Singapore Airlines has made it known years ago that it was considering options with respect to its Virgin stake. Virgin Atlantic has not been very profitable, posting a loss for the most recent financial year and slim returns in the years where it did make profits.
Singapore Airlines has itself launched a low-cost carrier, Scoot, and has been putting money into its regional service, SilkAir.