Delta Eyes Virgin Atlantic Joint Venture
Despite rumors to the contrary, Richard Branson, founder and chairman of Virgin Group, will maintain control of Virgin Atlantic Airways as Delta Air Lines (NYSE:DAL) negotiates with Singapore Airlines over the purchase of its 49 percent stake in the company. Branson owns the other 51 percent of Virgin Atlantic.
A source familiar with Branson’s thinking told Reuters that Delta and Virgin Atlantic could be pursuing a joint venture for transatlantic flights. The relationship could mean cost and revenue sharing, giving each company the right to book flights on the other airline.
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The deal could work out to the benefit of both airlines. Virgin Atlantic is the second-largest carrier at Heathrow, where space is constrained by high capacity. The joint venture would give Delta increased exposure to the airport, while Virgin could be bolstered by Delta’s growing revenue passenger and available seat miles.
It’s no secret that Virgin Atlantic has been suffering in the face of high fuel costs, the euro-zone crisis, and competition from American Airlines and British Airways, which already have a transatlantic partnership and a commanding spot at Heathrow.
A Good Move for Delta?
Delta Airlines took a public-relations hit recently when it was reportedly caught illegally collecting information from its mobile app, but the bad news doesn’t seem to be outweighing the positive speculation. Shares have been trending up for the last five days as rumors circulated…