Singapore carrier SIA finally gave up on its UK investment into Virgin Atlantic as the Singapore carrier wants to concentrate on its core Asian market.
SINGAPORE- The Island’s national carrier Singapore Airlines has agreed to sell its 49 per cent stake in Virgin Atlantic to Delta Air Lines for US$360 million (S$439 million) in cash.
In a statement issued this evening, Singapore Airlines said it 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”.
It also said the sale will result in a profit being booked in its accounts. Singapore Airlines acquired the stake in the Australian-based airline group in 2000.
Delta Air Lines Inc. agreed to buy the 49 per cent stake in Richard Branson’s Virgin Atlantic Airways Ltd. to boost its share of the lucrative trans-Atlantic travel market.
Virgin, the biggest long-haul rival to British Airways at London’s Heathrow airport, will also join forces with Atlanta- based Delta for the operation of flights between Europe and North America, the companies said today in a statement.
The deal positions Delta to grab a bigger slice of the world’s biggest market for premium passengers and boosts the presence of its SkyTeam alliance at Heathrow, Europe’s busiest air hub. While Virgin founder Branson will retain control, it also marks the end of a go-it-alone strategy for a company the 62-year-old U.K. billionaire founded almost three decades ago.
“Our new partnership 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 Chief Executive Officer Richard Anderson said in the statement.
Delta and Virgin will file an application for antitrust immunity to the U.S. Department of Transportation to allow them to coordinate schedules, the statement said.
The carriers aim to operate a “metal neutral” joint venture, sharing costs and revenue across 31 peak-day round-trip flights.
The Virgin brand will be retained and Richard Branson said in the statement that the deal “signals the start of a new era of expansion, financial growth and many opportunities.”
(Source: Bloomberg)
Luc Citrinot a French national is a freelance journalist and consultant in tourism and air transport with over 20 years experience. Based in Paris and Bangkok, he works for various travel and air transport trade publications in Europe and Asia.
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