Delta Air Lines (DAL) Said Close to Virgin Stake Deal for Up to $500 Mln

By Dec 10, 2012, 12:17 PM Author's Blog  

Delta Air Lines Inc. (DAL) is nearing a deal to buy a 49 percent stake in Virgin Atlantic Airways Ltd. from Singapore Airlines Ltd. (SIA) and may pay less than $500 million for it, three people familiar with the matter said.

The price range is $300 million to $500 million and an agreement may be announced this week, said the people, who asked not to be identified because the talks are private. Singapore Airlines paid 600 million pounds for the Virgin Atlantic stake in 1999, or about $966 million now.

Delta and Virgin Atlantic may seek a joint venture on trans-Atlantic routes as part of the arrangement, two of the people said. That would give Atlanta-based Delta improved access to flights across the North Atlantic, the world’s most lucrative market for premium passengers.

Richard Branson, the U.K. billionaire who holds 51 percent of Virgin Atlantic, will probably remain in control of the Crawley, England-based carrier, Chief Executive Officer Steve Ridgway said last week in an interview.

Spokesmen for Virgin Atlantic, Singapore Airlines and Delta declined to comment.

Singapore Airlines said last week that negotiations with “interested parties” were under way and may not result in a transaction. A “reasonable price” for the 49 percent Virgin stake would be about $200 million to $300 million, a Barclays Plc analyst, David Fintzen, wrote in a Dec. 7 note to clients.

Virgin Atlantic operated 40 planes as of May 2012, while Delta, the world’s second-largest carrier, has 725 aircraft in its main jet fleet.

By Mary Jane Credeur & Aaron Kirchfeld

Courtesy of Bloomberg News

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