Delta finally does what it wanted – and has gone ahead to acquire the 49% of Virgin Atlantic that Singapore Airlines was selling.
For the cool sum of $360 million (£244 Million), Delta gets more access to Heathrow, and the ability to set another joint venture across the Atlantic. For Richard Branson – 51% of the airline is still held by the Virgin Group with it’s own brand and operating certificate to be retained.
The Delta-Virgin Atlantic joint venture will operate 31 flights a day, with 9 of those flights dedicated to operating between London and New York JFK/Newark International Airport.
Delta will have to apply to the various anti-trust authorities over the 49% share of the airline, as well as the Joint Business Venture between the airlines.
Richard Branson seems happy, saying
“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”
Delta CEO Richard Anderson seems happy with more Trans-Atlantic access, stating
“”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.”
Meanwhile, the biggest looser in this seems to be Singapore Airlines, who originally brought the 49% share of Virgin Atlantic for £600 million – and having to sell at £244 Million – one hell of a loss. The airline says:
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.
For frequent flyers, the current Virgin- Singapore Airlines arrangement will remain in place for now and probably until way after the sale is complete. Meanwhile Virgin and Delta are planning to allow reciprocal frequent flyer benefits, including shared access to Delta Sky Club and Virgin Atlantic Clubhouse lounges.
Well, this could be the shot in the arm that Virgin Atlantic needs. After staying out of the alliance game for far too long, failing to gobble up BMI when it had the chance, and using the power of whining to get what it wants rather than going out there, hopefully Delta will steer them in some sort of new direction that won’t be too painful for the customer – and yet deliver value to the new owner of the 49% of Virgin Atlantic…