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Published: Monday December 3, 2012 MYT 8:19:00 AM
Updated: Monday December 3, 2012 MYT 11:07:04 AM

Singapore Airlines says in talks to sell Virgin Atlantic stake(update2)

SINGAPORE/NEW YORK: Singapore Airlines said on Monday it was in talks with interested parties to sell its 49 percent stake in British carrier Virgin Atlantic, with sources revealing that Delta Air Lines Inc was among the potential suitors.

Delta, the second-largest U.S. airline by operating revenue after United Continental Holdings, wants to gain access to Virgin Atlantic's landing rights at London's Heathrow airport, according to two people familiar with the matter.

Delta has been looking to acquire a Virgin Atlantic stake for more than two years but previous talks broke down over price and other issues, and there is no guarantee that its recent discussions would result in a pact, the people said.

Singapore Airlines said in a brief statement it was in talks with interested parties but did not name them. It also cautioned that the discussions might not result in a deal.

The European Union requires that EU carriers be under European control, meaning Delta would need to involve an EU airline as a partner if it wanted majority control of Virgin.

Delta has been considering ways to partner with Air France-KLM, which could also take a stake in Virgin and allow the two carriers to acquire majority ownership, one of the people said. Virgin founder Richard Branson owns 51 percent of the airline.



"Delta now finds itself going up against the combination of American Airlines and British Airways," said George Hamlin, an aviation consultant in Fairfax, Virginia, referring to the two anchor members of the oneworld global alliance.

"British Airways brings along a feed from other destinations - both Europe and intercontinental - at Heathrow. Delta is basically a dead end at this point."



Delta declined to comment. Air France were not immediately available for comment outside regular business hours.






Aviation consultant Hamlin said a tie-up with Delta could give Virgin access to hundreds of markets on a one-stop connecting basis in the United States. For Delta, such a deal would help plug a weakness in its global network versus key competitors and make it a strong player at Heathrow.

"London obviously is the premier market and Heathrow is by and large the market leader. It's the lynchpin transatlantic market in terms of size and revenue, particularly premium traffic revenue," Hamlin said. - Reuters


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