Finally, SIA lets Virgin go

virgin-plane

Courtesy Virgin Atlantic

FINALLY, Singapore Airlines (SIA) is letting go of Virgin Atlantic. Or, shall we say, to be rid of it as for some years now the Singapore flag carrier, disappointed with the performance of its shareholding, has expressed its intention to divest the stake. (See Singapore Airlines in discussion to sell Virgin stake to Delta, Dec 4, 2012)

American carrier Delta Airlines has sealed a deal to purchase the 49-per-cent stake that SIA holds in Virgin for £224m (US$360m)… SIA bought the stake in 1999 for £600m (US$965m). Now, indeed, at that price, it tells of a wait that has been too long. It is said that SIA is selling the stake to focus on increased competition at home. Some media has reported SIA’s preoccupation to grow its new budget subsidiary Scoot. Not quite the kind of retreat you expect of an airline that has successfully spread its wings far and wide; if it is so, that’s another story.

However, it is good news for Delta, as a way to increase its trans-Atlantic presence to “overcome slot constraints” at London Heathrow.  Delta chief Richard Anderson said: “Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the UK, particularly on the New York-London route.”

Together, Virgin and Delta will offer 31 peak-day round trips between North America and the UK in direct competition with the British Airways/American Airlines alliance.

Sir Richard hailed the development as “the start of a new era of expansion, financial growth and many opportunities for our customers and our business.”

The next question to ask is whether Delta will stop there, as there had been rumours that the American carrier may co-opt European partners Air France-KLM to acquire some of the remaining 51-per-cent stake still owned by Sir Richard – the subject that had sparked a spat between Sir Richard and rival British Airways chief Willie Walsh, who allegedly suggested that the Virgin brand might not be around in five years. (See Is Virgin Atlantic on the verge of extinction? Dec 11, 2012).

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About David Leo
David Leo has more than 30 years of aviation experience, having served in senior management in one of the world's best airlines and airports. He continues to maintain a keen interest in the business, writes freelance and provides consultancy services in the field.

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