Partnership across Atlantic: Delta, Virgin on Strategic Alliance

14 Dec 2012

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Virgin Atlantic President, Mr. Richard Branson

Chinedu Eze
In tandem with the present culture of mergers and acquisition among major carriers in the world, one of America’s biggest airlines, Delta Air Lines and Virgin Atlantic Airways Limited of United Kingdom have announced a strategic alliance whereby Delta would invest $360 million (about over N57 billion) to acquire 49 per cent stake in Virgin.

The two airlines said in a statement that they have reached an agreement for a new joint venture that would create an expanded trans-Atlantic network and enhance competition between the U.K. and North America, offering greater benefits for customers travelling on those routes.

“As part of this joint venture agreement, Delta will invest $360 million in Virgin Atlantic, acquiring a 49 per cent stake currently held by Singapore Airlines. Virgin Group and Sir Richard Branson will retain the majority 51 per cent stake and Virgin Atlantic Airways will retain its brand and operating certificate.”

Highlights of the agreement include a fully integrated joint venture that would operate on a “metal neutral” basis with both airlines sharing the costs and revenues from all joint venture flights; a combined trans-
Atlantic network between the United Kingdom and North America with 31 peak-day round-trip flights; enhanced benefits for customers including cooperation on services between New York and London, with a combined total of nine daily round-trip flights from London Heathrow to John F. Kennedy International Airport and Newark Liberty International Airport.

The two airlines would also enjoy reciprocal frequent flyer benefits and shared access to Delta Sky Club and Virgin Atlantic Clubhouse airport lounges for elite passengers.

“The airlines will file an application with the U.S. Department of Transportation for antitrust immunity, which will allow a closer relationship and coordination on schedules and operations. The transaction also will be reviewed by the U.S. Department of Justice and the European Union’s competition regulator and other relevant authorities. The share purchase and the joint venture are expected to be implemented by the end of 2013,” the airlines said.

“Our new partnership with Virgin Atlantic 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,” said Delta CEO Richard Anderson, adding: “By combining the strengths of our two companies in a joint venture, we can provide customers with a seamless network between North America and the U.K., and continue building a better airline for our customers, employees and shareholders.”

Virgin Atlantic Chief Executive, Steve Ridgway, also said: “Consumers will reap the rewards of this partnership between two great airline brands on services from the U.K. to the USA, Canada and Mexico through a shared ethos in the highest standards of customer service. This unique joint venture will deliver much more effective competition at Heathrow.
“Both airlines are confident that the Department of Transportation will be as convinced as we are of the extensive consumer benefits arising from this joint venture, with expedited approval being granted by the end of 2013. The trans-Atlantic market is Virgin Atlantic’s heartland - it’s where we started. By aligning with Delta we can continue to grow our North American network and offer greatly enhanced connectivity across the USA.”

Virgin Atlantic President, Mr. Richard Branson, described the deal as exciting, noting: “It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business. I truly look forward to the possibilities our partnership with Delta will offer. We have always been known for our innovation and service and have punched above our weight for 28 years. That is why our customers love us so much. We will retain that independent spirit but move forward in a strengthened partnership with Delta.”

Tags: Atlantic, Business, Delta, Featured, Nigeria, Partnership

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