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Delta Air Lines buys 49% stake in Virgin Atlantic Delta Air Lines buys 49% stake in Virgin Atlantic
(35 minutes later)
America's Delta Air Lines has bought a 49% stake in Richard Branson's Virgin Atlantic carrier and struck a collaboration alliance which will see the two group's work together in competition with British Airways, the market leader in transatlantic aviation. America's Delta Air Lines has bought a 49% stake in Richard Branson's Virgin Atlantic carrier and struck a collaboration alliance that will see the two groups work together in competition with British Airways, the market leader in transatlantic aviation.
Delta will pay $360m (£224m) to Singapore Airlines, ending the Asian groups disappointing 12-year investment in Virgin. Singapore Airlines had acquired the near-half share from Branson in 2000 for £600m. Delta will pay $360m (£224m) to Singapore Airlines, ending the Asian group's disappointing 12-year investment in Virgin. Singapore Airlines had acquired the near-half share from Branson in 2000 for £600m.
Virgin's new partnership arrangements with Delta, which will require clearance from competition authorities, have been presented as a direct response to the controversial alliance between American Airlines and BA which handed the two airlines 60% of the transatlantic market four years ago.Virgin's new partnership arrangements with Delta, which will require clearance from competition authorities, have been presented as a direct response to the controversial alliance between American Airlines and BA which handed the two airlines 60% of the transatlantic market four years ago.
Sir Richard Branson has insisted the much-anticipated deal with Delta does not sound a death knell for the Virgin Atlantic brand – despite speculation to the contrary from Willie Walsh, chief executive of BA parent IAG, in recent days. Branson has insisted the much-anticipated deal with Delta does not sound a death knell for the Virgin Atlantic brand – despite speculation to the contrary from Willie Walsh, chief executive of BA parent IAG, in recent days.
Publicity around the tie-up between Delta and Virgin came close to descending into farce as Branson and Walsh taunted each other over the likely consequences for the airline established by the Virgin entrepreneur 28 years ago. After Walsh disparagingly suggested that Delta would not tolerate Branson's brand for long, suggesting the US airline was really largely focused on securing Virgin's Heathrow slots. Publicity around the tie-up between Delta and Virgin came close to descending into farce as Branson and Walsh taunted each other over the likely consequences for the airline established by the Virgin entrepreneur 28 years ago.
Branson hit back, provocatively proposing a £1m bet that the Virgin brand would remain in existence for at least five years. Later, Branson claimed on his blog that the goading exchanges had got even more puerile. "Glad to see Willie Walsh's rather childish response to my bet proposal," he posted. "Rather than the losing company giving the winner's staff £1m, he wants the loser to receive a knee in the groin." Walsh disparagingly suggested that Delta would not tolerate Branson's brand for long, suggesting the US airline was really largely focused on securing Virgin's Heathrow slots.
On more serious matters, Branson said: "For almost three decades Virgin Atlantic has been punching above its weight. We fought hard to stop BA and American Airlines getting together but they created a complete giant across the Atlantic. Now we are partnering with Delta we can give them a real run for their money which is, I suspect, why BA's chief executive has behaved the way he has over the last couple of days." Branson hit back, provocatively proposing a £1m bet that the Virgin brand would remain in existence for at least five years.
Later, Branson claimed on his blog that the goading exchanges had got even more puerile. "Glad to see Willie Walsh's rather childish response to my bet proposal," he posted. "Rather than the losing company giving the winner's staff £1m, he wants the loser to receive a knee in the groin."
On more serious matters, Branson said: "For almost three decades Virgin Atlantic has been punching above its weight. We fought hard to stop BA and American Airlines getting together but they created a complete giant across the Atlantic.
"Now we are partnering with Delta we can give them a real run for their money which is, I suspect, why BA's chief executive has behaved the way he has over the last couple of days."
While the two businesses will co-operate closely in many areas, generating significant – but undisclosed – savings, the Delta and Virgin liveries will remain distinct, leading to some suggestions the deal could lead to consumer confusion.While the two businesses will co-operate closely in many areas, generating significant – but undisclosed – savings, the Delta and Virgin liveries will remain distinct, leading to some suggestions the deal could lead to consumer confusion.
Customers at New York's John F Kennedy airport will be able to use either the Delta or the Virgin lounge which are alongside one another, while in years to come Delta's operations at Heathrow are expected to move alongside those of Virgin's at terminal three.Customers at New York's John F Kennedy airport will be able to use either the Delta or the Virgin lounge which are alongside one another, while in years to come Delta's operations at Heathrow are expected to move alongside those of Virgin's at terminal three.
The collaborative operation will bring together Virgin's six round-trip flights a day from Heathrow to JFK with a further three operated by Delta.The collaborative operation will bring together Virgin's six round-trip flights a day from Heathrow to JFK with a further three operated by Delta.
While both sides acknowledged deal negotiations had been hard fought, Delta's chief executive, Richard Anderson, sought to smooth over suggestions of any remaining tensions or cultural clashes with Branson's airline. "To be associated with a great business leader and a great business brand like this is truly humbling for us at Delta," he insisted, adding that Delta and Virgin cultures would "mesh well together".While both sides acknowledged deal negotiations had been hard fought, Delta's chief executive, Richard Anderson, sought to smooth over suggestions of any remaining tensions or cultural clashes with Branson's airline. "To be associated with a great business leader and a great business brand like this is truly humbling for us at Delta," he insisted, adding that Delta and Virgin cultures would "mesh well together".
Branson earlier this week insisted he would remain in control of Virgin, and on Tuesday reiterated the point. "Ignore the press speculation – I'm not going anywhere," he said.Branson earlier this week insisted he would remain in control of Virgin, and on Tuesday reiterated the point. "Ignore the press speculation – I'm not going anywhere," he said.
Both Delta and Virgin were emphatic in their insistence that the collaboration would improve rather than damage consumer choice. Virgin's chief executive Steve Ridgway said the alliance "will be combatting their [BA's] dominance of 60% of the North Atlantic [flight market]". Branson said the deal was necessary to create a partnership that would "give the rest of the industry a true run for their money". Both Delta and Virgin were emphatic in their insistence that the collaboration would improve rather than damage consumer choice.
Virgin's chief executive Steve Ridgway said the alliance "will be combatting their [BA's] dominance of 60% of the North Atlantic [flight market]". Branson said the deal was necessary to create a partnership that would "give the rest of the industry a true run for their money".
The Virgin founder said he had asked Anderson if there was any truth to Walsh's claims that Delta intended to kill off the Virgin brand. "He replied: 'No! This makes my blood boil. The whole purpose is to join our brands together.'"The Virgin founder said he had asked Anderson if there was any truth to Walsh's claims that Delta intended to kill off the Virgin brand. "He replied: 'No! This makes my blood boil. The whole purpose is to join our brands together.'"
Started in 1984 with a single flight from Gatwick to Newark in New Jersey, Virgin now flies to 34 destinations and carries around six million passengers a year.
Delta serves more than 160 million customers a year and offers services to more than 300 destinations in 58 countries.