Bloomberg News

Branson May Trim Stake in Virgin Atlantic, Sunday Times Reports

December 09, 2012

U.K. billionaire Richard Branson is in talks to sell part of his 51 percent stake in Virgin Atlantic Airways Ltd. to Air France-KLM Group (AF), the Sunday Times reported, citing unidentified people with knowledge of the discussions.

A three-way transaction would also see Atlanta-based Delta Air Lines Inc. buying Singapore Airlines Ltd.’s 49 percent share in the U.K. carrier, the Times said. A deal may be concluded early next week, according to the newspaper.

Calls to Air France and Delta went unanswered outside normal office hours. Joanne Foster, a Virgin spokeswoman, said by e-mail that the company is “always talking to many airlines on a number of different matters but we never comment on the details of these discussions.” Singapore spokesman Nicholas Ionides declined to comment beyond a Dec. 3 statement that reported the airline’s negotiations with “interested parties.”

The Asian carrier paid 600 million pounds ($962 million) for its holding in 1999. The global economic slowdown, rising fuel prices and increased competition out of London’s Heathrow Airport have weighed on Virgin Atlantic’s earnings since then.

Branson hired Deutsche Bank AG in 2010 to study possible alliances and said earlier this year that Virgin Atlantic was in advanced talks. The carrier posted a loss of 80.2 million pounds for the year through February and has delayed adding bigger planes.

North Atlantic flights generate about a quarter of all global revenue from first- and business-class fares, more than twice as much as the second-place Pacific routes, according to the International Air Transport Association. Heathrow is closer to London than Delta’s previous base at Gatwick airport, which U.S. airlines have shunned since flight rules eased in 2008.

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net


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