US, EU approve Delta-Virgin Atlantic merger

21 Jun 2013

Competition regulators of the US and the European Union (EU) have given their approvals yesterday for the proposed acquisition of a 49-per cent stake in British business magnate Richard Branson's Virgin Atlantic Airways Ltd by US carrier Delta Airlines Inc.

Delta will acquire the stake from Singapore Airlines, thus becoming the minority shareholder while Virgin Group will retain its 51-per cent ownership in the UK-based Virgin Atlantic.

Georgia-based Delta had revealed its plans to buy the European carrier's stake for $360 million earlier in December and also form a joint venture on flights between North America and the UK, aiming to boost its market share in the lucrative transatlantic routes. (See: Delta buys Singapore Airlines' 49 % stake in Virgin Atlantic)

Approving the tie-up, the US department of justice said in a statement: "After a thorough investigation of the competitive effects of the proposed equity investment and joint venture, the antitrust division concluded that the facts and circumstances did not warrant further investigation or action."

The deal also requires the approval from the US transportation department, which Delta expects to get later this year.

On its part, the European commission, the European watchdog, has also concluded that the proposed transaction did not raise competition concerns.

Delta and Virgin Atlantic will enter into a fully integrated joint venture to bring together their transatlantic operations between the UK and North America. The commission confirmed that in all markets, the combined entity will would continue to face competition from several strong players, particularly British Airways and American Airlines.

Moreover, Delta and Virgin are currently not particularly close competitors, but primarily compete against British Airways and American Airlines, the commission said.

Founded in 1984 by Branson and based at Gatwick, Heathrow and Manchester airports, Virgin Atlantic is Britain's second-largest airline serving the world's major cities. The airline flies to 34 destinations worldwide, including locations across North America, the Caribbean, Africa, the Far East and Australia. The company is not a member of any global airline alliance.

Delta is the second-largest US carrier, having its fleet operating to more than 350 destinations in 66 countries on six continents. The company is the founding member of the SkyTeam global alliance. It is also in a trans-Atlantic joint venture with Air France-KLM and Alitalia.

Delta had said that the deal would allow it to gain significant foothold in London's Heathrow airport, the Europe's busiest air terminal. Both Delta and Virgin Atlantic will sell tickets on each other's flights, thereby allowing Delta to increase its flight offerings in the world's busiest New York-London air route.