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Delta gets Singapore Airlines stake in Virgin Atlantic cheaply

There will be flow on effects on Virgin Australia flyers and investors from the official sale of 49% of Virgin Atlantic to Delta Air Lines which has just been announced in New York but it may take time for them to become apparent.

The deal, in which Singapore Airlines takes a bath on its original £600 million purchase of the equity back in 1999, was foreshadowed nine days ago.

Given the trans Pacific joint venture alliance between Delta and Virgin Australia, there is anticipation in many quarters that this will produce fresh benefits and opportunities for members of the Virgin Australia Velocity loyalty program, and there is also a very strong on-going commercial alliance between Singapore Airlines and Virgin Australia.

Less clear is whether or not Delta has any intention to sooner or later acquire equity in Virgin Australia Holdings. The media reports now appearing overseas quote Richard Branson, who owns 26% of the Australian venture he co-founded with Brett Godfrey in 1999 as saying that the Virgin Atlantic brand will live on, and that he is not going anywhere any time soon.

Virgin Atlantic is 51% owned by Branson’s private company.

The Delta deal clearly addresses Branson’s long articulated concerns about the risks to his business posed by the various alliance arrangements that have been made and proposed between British Airways and American Airlines since both airlines, in concert with Qantas, founded the oneworld alliance almost 14 years ago.

It also closely follows the launch of domestic UK services by Virgin Atlantic, from March next year, using slots that British Airways was compelled to surrender at London’s Heathrow airport, following its purchase of now defunct bmi, formerly the British Midland airlines group.

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