The airline announced it was having discussions with parties that were interested in the stake Singapore has in VA
December 3, 2012 – On Monday, Singapore Airlines announced it was in negotiations to sell its Virgin Atlantic stake. If the sale takes place, air travel in Europe and Asia could be changed. The airline announced it was having discussions with parties that were interested in the stake Singapore has in VA.
However, it cautioned that the ongoing negotiations might not lead to any deal. Singapore Airlines has owned a 49% share in Virgin Atlantic for 13 years, while the controlling interest has been held by Richard Branson the British entrepreneur.
The possible suitors for the stake were not listed by Singapore Airlines, but media reports have suggested that Delta Airlines is taking part in the negotiations. A spokesperson for the airline, based in the U.S., declined to make a comment on Monday and a Virgin Atlantic representative referred all questions to Singapore Airlines.
If Singapore Airlines divests, it would be just the latest round of shuffling in the airline industry, which has become commonplace of late. Carriers have been turning to consolidation recently as fuel costs continue to rise and weak demand is affecting profitability.
The last expansion for Delta was in 2008 when it merged with Northwest Airlines. That consolidation was difficult, with cultural differences, passenger expectation problems and computer system problems.
However, tying in with Virgin could prove to have many strategic benefits for Delta, the United States’ second largest carrier, including space that is coveted at Heathrow International Airport in London, and more access to Asian and European markets.
It also could be a good deal for Virgin, which is being squeezed more and more by competitors that offer deep discounts. The airline also does not have a partnership with a major airline and that is something that Delta could provide.