Air France-KLM Group will acquire a 31% stake in Virgin Atlantic as part of a new transatlantic joint venture (JV) with the UK carrier and its US stablemate, Delta Air Lines. The Franco-Dutch group will pay the Virgin Group £220m for the stake, which is subject to board and regulatory approval. The deal, which is expected to close in 2018, will see Sir Richard Branson’s holding in the airline he founded recede to 20% with Delta accounting for the other 49%.
Virgin Atlantic insists it will retain its independence as a British airline with a UK operating certificate, and continue to fly under the Virgin brand. The terms of the deal also state that Virgin Group retains the chairmanship of the airline.
Sir Richard said: “Virgin Atlantic has made a big difference to people’s flying experience over the past 33 years and transformed the airline industry for the better. This is a fantastic opportunity to extend our network and create a stronger customer champion, as well as being extremely beneficial to our people and the Virgin Atlantic brand that our customers love dearly.”
The airline said the new JV with Air France-KLM and Delta will give customers access to the “most comprehensive transatlantic route network” via more than 300 daily nonstop flights.
Craig Kreeger, the UK carrier’s CEO, said: “We built the Virgin Atlantic brand by providing customers with the choice they deserve and a travel experience they love. We couldn’t be more excited that the next stage of our growth will be at the heart of the strongest partnership for customers traveling between Europe and North America. Together with our friends at Air France-KLM and Delta we will build on this vision of our teams creating irresistible experiences for customers flying on our network.”
Delta has helped facilitate Air France-KLM Group’s move for Virgin via a 10% investment in the Franco-Dutch firm, with China Eastern also acquiring a 10% stake, in deals totalling €751m. As part of the deal the airlines will each get a seat on the Air France-KLM Group board, the first nominated by China Eastern and the second by Delta.
Ed Bastian, Delta’s CEO, added: “By working even more closely with our great partners at Air France-KLM and Virgin Atlantic, together we will develop a path to increase competition across the Atlantic that will spur additional benefits for customers, employees and shareholders.”