Air France-KLM acquires a controlling stake in Virgin Atlantic.


Control of Virgin Atlantic changed hands last week after the carrier, the Air France-KLM Group and Delta Air Lines said they were expanding their strategic partnership in a move widely seen as an attempt to beat off increasing competition.

In selling part of his stake in the company, Virgin Group tycoon Richard Branson said the move would help the airline he founded in 1984 to better compete with British Airways and other rivals flying across the Atlantic.

aCUAaA*Delta has helped us considerably with feed from America, but because we donaCUAaA[acute accent]t have more slots at Heathrow or Gatwick weaCUAaA[acute accent]re unable to enjoy feed from Europe or provide extra onward journeys for those customers we are now carrying to London,aCUAaA[sup.1] Branson said in an open letter to Virgin Atlantic employees. aCUAaA*To address this weaCUAaA[acute accent]ve been in discussions with DeltaaCUAaA[acute accent]s partners in Europe, Air France and KLM, to give us that network and connections.aCUAaA[sup.1]

The partners say the long-term joint venture, planned to run for at least 15 years, will offer what they called aCUAaA*the most comprehensive transatlantic route networkaCUAaA[sup.1], with convenient flight schedules, competitive fares and reciprocal frequent-flyer benefits.

Delta will buy a 10% stake in Air France-KLM for aCUAcA[umlaut]375 million ($438 million), deepening an already entrenched partnership between the companies. Meanwhile, Air France-KLM is buying a 31% stake in Virgin Atlantic for A[pounds sterling]220 million ($287 million).

Virgin Group will retain a 20% stake and the chairmanship, currently held by Sir Richard Branson, while Delta will retain its 49% stake in Virgin Atlantic. Virgin Atlantic would stay a UK independent UK airline and continue to fly under the Virgin brand.

Describing the moves as aCUAaA*deepening a long-standing and industry-leading partnershipaCUAaA[sup.1], Delta in turn is investing aCUAcA[umlaut]375m to acquire 10% of the equity of Air France-KLM Group and...

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