Delta near deal to buy Virgin Atlantic stake: source

Mon Dec 10, 2012 1:27pm EST
 
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By Rhys Jones

LONDON (Reuters) - Delta Air Lines Inc DAL.N is nearing an agreement to buy Singapore Airlines' SIAL.SI 49 percent stake in Virgin Atlantic VA.UL, and is expected to agree to a transatlantic joint venture with the British carrier, a source said.

Meanwhile, Richard Branson said he planned to keep control of the carrier he set up and said International Airlines Group ICAG.L boss Willie Walsh was misguided for saying the brand would be ditched by Delta.

"Rumors have been spread in the press that I am planning to give up control of Virgin Atlantic and, according to Willie Walsh ... that our brand will soon disappear. This is wishful thinking and totally misguided," Branson said on Monday.

A source familiar with Branson's thinking told Reuters that Virgin Atlantic would form a joint venture on transatlantic flights with Delta if the U.S. carrier bought Singapore Airlines' stake in the British carrier, which Branson set up in 1984.

Delta and Virgin Atlantic's plan to set up a revenue-sharing deal on flights between Britain and the United States would involve code-sharing, allowing both to sell flights on the other airline and share revenues from ticket sales, the source said.

The joint venture could lead to the pair sharing costs and bringing prices and schedules into line, the source said.

The partnership would be similar to that operated by American Airlines AAMRQ.PK and IAG's British Airways (BA) since 2010 on transatlantic flights between Canada, Mexico, the United States and many European cities.

Delta has acquired stakes in Grupo Aeromexico AEROMEX.MX and Brazil's Gol Linhas Aereas GOLL4.SA over the past year, and has long hoped to break into capacity-constrained Heathrow. Virgin Atlantic is the second-largest carrier at the airport after BA.   Continued...

 
A passenger talks on her phone at a Delta Airlines gate a day before the annual Thanksgiving Day holiday at the Salt Lake City international airport, in Salt Lake City, Utah November 21, 2012. REUTERS/George Frey