Delta Buys Big Stake in Virgin Atlantic

by Nate Wooley | December 11, 2012 1:25 pm

Delta Buys Big Stake in Virgin Atlantic

Delta Airlines2 300x199 Delta Buys Big Stake in Virgin Atlantic[1]Delta Air Lines (NYSE:DAL[2]) is expanding its overseas reach by purchasing a 49% stake[3] in Virgin Atlantic.

Delta paid $360 million for the minority stake, and is forming a joint venture with the U.K.-based Virgin Atlantic to set fares and schedules so both airlines can be more efficient, Reuters reports. The joint venture will require regulatory approval on both sides of the Atlantic; however, both firms say the sale will go through regardless of whether the joint venture is approved.

The target of the purchase is the attractive New York-London travel route. Between the two carriers, there are nine flights between London and the greater New York City area, and 31 flights between New York and any part of the U.K.

Business travelers on both sides of the Atlantic often find themselves having to switch carriers in New York to get to their final destination. By working together, Delta and Virgin Atlantic hope to keep those travelers on their own flights instead of seeing them switch carriers midway through their trips.

The deal also improves the name recognition for the smaller Virgin Atlantic. With only 38 planes of its own, the partnership with the 725-plane Delta fleet will bring more customers to the U.K. firm.

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Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2011/05/Delta-Airlines2.jpg
  2. DAL: http://studio-5.financialcontent.com/investplace/quote?Symbol=DAL
  3. purchasing a 49% stake: http://www.reuters.com/article/2012/12/11/uk-delta-virgin-idUSLNE8BA02K20121211
  4. Airline CEO: Seatbelts on Plane are Useless: http://investorplace.com/2012/11/airline-ceo-seatbelts-on-plane-are-useless/
  5. United Continental Struggles to Ride Out Post-Merger Turbulence: http://investorplace.com/2012/11/united-continental-struggles-to-ride-out-post-merger-turbulence/
  6. 5 Travel Destinations With the Biggest Bank for Your Buck: http://investorplace.com/2012/10/5-travel-destinations-with-the-biggest-bang-for-your-buck/

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