Delta Acquires 49% Stake in Virgin Atlantic

Airplane, dusk
Airplane, dusk

Delta Air Lines Inc. (NYSE: DAL) announced this morning that it had acquired the 49% stake in Virgin Atlantic Airways previously owned by Singapore Airlines for $360 million. Delta and Virgin Atlantic will create a new joint venture, the essential part of which is to provide Delta with more gate access to London's Heathrow Airport.

The acquisition is subject to regulatory approvals in both the U.S. and the European Union, and is expected to be completed by the end of 2013. Delta will file a request with the U.S. Department of Transportation for immunity from antitrust rules, which would allow the partners to coordinate schedules and operations more closely.

Virgin Atlantic president Sir Richard Branson said:

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.

The acquisition represents a serious discount to the $962 million that Singapore Airlines paid for the stake in 1999. However it never fully developed the partnership with Virgin, as Delta has now promised to do.

Shares of Delta are up nearly 4% on the announcement, at $10.52 in a 52-week range of $7.83 to $12.25.

Paul Ausick

Filed under: 24/7 Wall St. Wire, Airlines, Mergers & Acquisitions Tagged: DAL