UPDATE 3-Delta near deal to buy Virgin Atlantic stake - source
* Virgin-Delta plan revenue, code sharing JV - source
* Branson plans to keep control of Virgin Atlantic
* JV reliant on Delta buying Singapore's Virgin stake
By Rhys Jones
LONDON, Dec 10 (Reuters) - Delta Air Lines Inc is nearing an agreement to buy Singapore Airlines' 49 percent stake in Virgin Atlantic, and is expected to agree to a transatlantic joint venture with the British carrier, a source said.
Meanwhile, Richard Branson said he planned to keep control of the carrier he set up and said International Airlines Group boss Willie Walsh was misguided for saying the brand would be ditched by Delta.
"Rumors have been spread in the press that I am planning to give up control of Virgin Atlantic and, according to Willie Walsh ... that our brand will soon disappear. This is wishful thinking and totally misguided," Branson said on Monday.
A source familiar with Branson's thinking told Reuters that Virgin Atlantic would form a joint venture on transatlantic flights with Delta if the U.S. carrier bought Singapore Airlines' stake in the British carrier, which Branson set up in 1984.
Delta and Virgin Atlantic's plan to set up a revenue-sharing deal on flights between Britain and the United States would involve code-sharing, allowing both to sell flights on the other airline and share revenues from ticket sales, the source said.
The joint venture could lead to the pair sharing costs and bringing prices and schedules into line, the source said.
The partnership would be similar to that operated by American Airlines and IAG's British Airways (BA) since 2010 on transatlantic flights between Canada, Mexico, the United States and many European cities.
Delta has acquired stakes in Grupo Aeromexico and Brazil's Gol Linhas Aereas over the past year, and has long hoped to break into capacity-constrained Heathrow. Virgin Atlantic is the second-largest carrier at the airport after BA.
Delta could pay $300 million to $500 million for the 49 percent stake in Virgin, Bloomberg reported on Monday citing people familiar with the matter. Singapore Airlines bought 49 percent of Virgin Atlantic for 600 million pounds ($962 million) in 1999, but has been open to selling its stake since at least mid-2011 when a price of $500-$600 million was mooted in markets, a banking source familiar with the talks said at the time.
Walsh, chief executive of IAG, told the Daily Telegraph newspaper that Delta's main interest in Virgin Atlantic was in its lucrative slots at London's Heathrow airport and the U.S. carrier would not want to keep the Virgin brand.
A combination with Delta, the second-largest U.S. airline by revenue after United Continental, would be a shot in the arm for Virgin Atlantic, which has been battered by rising fuel prices and the euro zone crisis. It posted an 80 million pound ($128 million) loss in its last full year.
Earlier this month, sources said Delta was keen to see Air France-KLM - a member of its SkyTeam alliance - buy a stake in Virgin Atlantic to give the pair control of the airline's operations.
Delta declined to comment.
The European Union requires EU carriers to be under European control, meaning Delta would need an EU airline as a partner if it wanted majority control of Virgin Atlantic. If Air France-KLM were to buy a small part of Branson's stake, then Virgin Atlantic could continue to be European controlled.