Black and White Program

Branson retains control of Virgin Atlantic Airways in sale of 49% stake

December 13th, 2012 by Kyle Rankin

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For years after Richard Branson started Virgin Atlantic Airways, he always felt that he was alone in battle with British Airways which, he claimed, was always trying to drive his airline into bankruptcy. Singapore Air paid 600.3 million pounds for its stake in Virgin in 1999, or $966 million present day value, and has written down approximately 96 percent of goodwill from the deal. Now Delta Air Lines $DAL has agreed to buy the 49 percent stake in Virgin Atlantic held by Singapore Airlines Ltd. for $360 million. Delta believes that the investment will assist it in increasing market share of the premium price trans-Atlantic travel market. Now Delta and Virgin Atlantic will be on a more level playing field against British Airways for the long-haul flights coming in and out of London’s Heathrow airport between the U.K. and North America.

While Branson will maintain control of Virgin, it marks the end of his total independence with an airline that he founded nearly 30 years ago. The transaction has to pass through British regulators for antitrust concerns. At issue is the coordination of schedules and pricing, as well as cost and revenue sharing of joint-venture flights.

Virgin had a $129 million loss in the year ended Feb. 29, 2012, attributed to high fuel prices, competition from a pact between British Airways and AMR Corp.’s American Airlines $AAMRQ as well as from Qatar Airways.

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