Delta Air Lines Buys 49 Percent Stake in Virgin Atlantic

Virgin AtlanticBy JOSHUA FREED

Delta Air Lines (DAL) said it will buy almost half of Virgin Atlantic for $360 million as it seeks a bigger share of the lucrative New York-to-London travel market.

Delta plans to form a joint venture with Virgin Atlantic, where the two airlines would share money from the flights operated under the partnership. In order to coordinate the schedules of the two airlines, they'll need antitrust approval from U.S. and European regulators.

Landing rights at London's Heathrow Airport are limited. So buying part of Virgin Atlantic is a way for Delta to get a bigger piece of the travel market between Heathrow and the U.S. Currently, Delta has fewer flights from the New York area to Heathrow than either American or United, its main U.S. competitors.

If the plan is approved, Delta and Virgin Atlantic would continue to fly between the U.S. and the U.K., as they do now. However, they would market the flights together and share the costs and profits.

Delta said it expects to have 31 round-trip flights between the U.K. and North America on the busiest days, including nine round-trips a day between Heathrow and John F. Kennedy International Airport in New York and Newark Liberty International Airport in New Jersey.

Heathrow is dominated by British Airways, which works closely with American Airlines. They have a total of 14 flights a day in each direction between JFK and Newark and Heathrow.

Delta is seeking something similar with Virgin Atlantic.

"Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the U.K., particularly on the New York-London route, which is the largest airline route between the U.S. and Europe," Delta CEO Richard Anderson said in a prepared statement.

Delta is aiming to have the joint operation running by the end of 2013.

Sir Richard Branson will still own more than half of Virgin Atlantic, which will continue to fly as a separate airline under its own name. In 2000, Branson sold a stake to Singapore Airlines for 600.3 million pounds, or about $960 million at the time. That's the share that Delta intends to buy.

Virgin Atlantic has struggled with losses and said in 2010 that it might be interested in some kind of tie-up with another airline. British media reports at that time said that Delta was interested.

Shares of Atlanta-based Delta Air Lines Inc. rose 16 cents to $10.30 in premarket trading.


Increase your money and finance knowledge from home

Investor’s Toolbox

Improve your investing savvy with the right financial toolset.

View Course »

Goal Setting

Want to succeed? Then you need goals!

View Course »

Add a Comment

*0 / 3000 Character Maximum

7 Comments

Filter by:
discoq01

bye bye Virgin!

December 12 2012 at 1:17 AM Report abuse +1 rate up rate down Reply
discoq01

bye bye Virgin!

December 12 2012 at 1:17 AM Report abuse -1 rate up rate down Reply
tq85pup

Virgin Atlantic was one of my favorite airlines. Let's just hope this purchase by Delta doesn't bring the quality down to Delta's level. I hated to learn this.

December 11 2012 at 10:16 PM Report abuse +3 rate up rate down Reply
vicki1103

Easy people easy...........

December 11 2012 at 8:38 PM Report abuse -1 rate up rate down Reply
vicki1103

Easy people easy...........

December 11 2012 at 8:38 PM Report abuse -1 rate up rate down Reply
flagag

hiii

December 11 2012 at 5:29 PM Report abuse -1 rate up rate down Reply
lowardimg

What happened toDELTA & COMAIR HHHMMMMMMMMMMMMMMMMMM.
LET'S SEE WHAT ELSE THEY CAN SCREW UP!!!! BESIDES MY RESEVATIONS !!

December 11 2012 at 3:42 PM Report abuse rate up rate down Reply
srszee

Wasn't Delta in bankruptcy just a few short years ago?

December 11 2012 at 3:08 PM Report abuse +1 rate up rate down Reply
Susan

Let's hope Delta doesn't ruin a great airline! Love Virgin Atlantic. Hope nothing changes on VA flights and services because I am so not impressed with Delta.

December 11 2012 at 2:24 PM Report abuse +1 rate up rate down Reply
reseecupga

Delta? This is the same airline that was struggling so bad 10 years ago it's "long term" employees were told to take early retirement packages or other "short term" employees would lose their jobs ... I know, I was there at the time. Their finances were so bad at the time and their subsidiary company, Comair, was helping to drag them into bankruptcy. Their CEO retired and took millions with him to get the hell out before the ball dropped. And we the employee were told we were the ones who were going to pay for it, and some of us did. The bottom fell out and the company stock (which many of us owned a lot of) went straight to the bottom ... worthless, thats what we were told. Employees quit and employees were terminated (some for no good reason) and NOW they are doing so well they can buy V.A? They should be ashamed of what they did to people back then to get to where they are today.

December 11 2012 at 10:55 AM Report abuse +2 rate up rate down Reply