Delta, Virgin to take Atlantic battle to BA and AA

Delta, Virgin to take Atlantic battle to BA and AA
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Delta will acquire 49% of Virgin Atlantic as the carriers revealed plans to form a trans-Atlantic alliance that will go head to head with British Airways and American Airlines.

The US airline will buy the stake from Singapore Airlines in a deal worth US$360m (A$341m).

Singapore confirmed it has been "evaluating" the stake for some time "as the investment has not performed to expectations and the synergies the parties originally hoped for have not materialised".

Virgin stressed it will retain a 51% interest and that the Virgin Atlantic brand will not disappear, despite speculation to the contrary in recent days from Willie Walsh, chief executive of British Airways parent, IAG.

The JV, which is subject to regulatory approval in the US and Europe, will operate 31 peak day return services across the Atlantic, reciprocal frequent flyer benefits and shared lounge access.

"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 which is the largest airline route between the US and Europe," Delta chief executive Richard Anderson said.

"By combining the strengths of our two companies in a joint venture, we can provide customers with a seamless network between North America and the UK and continue building a better airline for our customers, employees and shareholders."

Virgin Atlantic president, Richard Branson, described the venture as the start of a new era of "expansion, financial growth and many opportunities".

"We will retain [our] independent spirit but move forward in a strengthened partnership with Delta," he said.

Branson dismissed disparaging remarks from Walsh who suggested Delta was not interested in Virgin as an airline or brand and was only seeking its slots at Heathrow.

"We fought hard to stop BA and American Airlines getting together but they created a complete giant across the Atlantic," he said. "Now we are partnering with Delta we can give them a real run for their money which is, I suspect, why BA's chief executive has behaved the way he has over the last couple of days."

Virgin Atlantic chief executive Steve Ridgway predicted the regulatory authorities would be “as convinced as we are” about the consumer benefits.

“This joint venture will deliver much more effective competition at Heathrow,” he said.

The proposed agreement will see the airlines share costs and revenues on all JV flights, irrespective of who operates the services.

The deal and creation of the alliance is expected to be completed by the end of 2013.

Singapore Airlines said commercial arrangements with Virgin Atlantic in the form of copdeshares, frequent flyer ties and reciprocal lounge access are expected to remain in place after the sale is completed.

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